Document:

SECURITIES
      PURCHASE AGREEMENT 

     

    This
      Securities Purchase Agreement (this “Agreement”) is dated as of April
      ___, 2006 among Mobilier Inc., a Delaware corporation (the “Company”),
      and each purchaser identified on the signature pages hereto (each, including
      its
      successors and assigns, a “Purchaser” and collectively the
“Purchasers”). 

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended and Rule 506 promulgated
      thereunder, the Company desires to issue and sell to each Purchaser, and each
      Purchaser, severally and not jointly, desires to purchase from the Company,
      securities of the Company as more fully described in this Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Purchaser agree as follows:

     

    ARTICLE
      I. 

    DEFINITIONS
      

     

    1.1
      Definitions.
      In
      addition to the terms defined elsewhere in this Agreement: (a) capitalized
      terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Debentures (as defined herein), and (b) the following terms have the
      meanings indicated in this Section 1.1: 

     

    “Action”
      shall have the meaning ascribed to such term in Section 3.1(j). 

     

    “Affiliate”
      means any Person that, directly or indirectly through one or more
      intermediaries, controls or is controlled by or is under common control with
      a
      Person, as such terms are used in and construed under Rule 144 under the
      Securities Act. With respect to a Purchaser, any investment fund or managed
      account that is managed on a discretionary basis by the same investment manager
      as such Purchaser will be deemed to be an Affiliate of such Purchaser.

     

    “Broker”
      means Axiom Capital Management, Inc., 780 Third Avenue, 43rd
      Floor,
      New York, NY 10017, Fax: (212) 521-3888. 

     

    “Business
      Day” means any day except Saturday, Sunday and any day which shall be a
      federal legal holiday in the United States or a day on which banking
      institutions in the State of New York are authorized or required by law or
      other
      government action to close. 

     

    “Closing”
      means the closing of the purchase and sale of the Securities pursuant to Section
      2.1. 

     

    “Closing
      Date” means the Business Day when all of the Transaction Documents have been
      executed and delivered by the applicable parties thereto, and all conditions
      precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and
      (ii) the Company’s obligations to deliver the Securities have been satisfied or
      waived. 

    
      
        
        

      

      
        
        

        
          

        

      

       

    

     

    “Collateral
      Agent Agreement” shall mean the Collateral Agent Agreement in substantially
      the form of Exhibit F hereto executed and delivered contemporaneously
      with this Agreement. 

     

    “Commission”
      means the Securities and Exchange Commission. 

     

    “Common
      Stock” means the common stock of the Company, par value $0.0001 per share,
      and any other class of securities into which such securities may hereafter
      have
      been reclassified or changed into. 

     

    “Common
      Stock Equivalents” means any securities of the Company or the Subsidiaries
      which would entitle the holder thereof to acquire at any time Common Stock,
      including without limitation, any debt, preferred stock, rights, options,
      warrants or other instrument that is at any time convertible into or
      exchangeable for, or otherwise entitles the holder thereof to receive, Common
      Stock. 

     

    “Company
      Counsel” means Alan W. Peryam, LLC, 1120 Lincoln Street, Suite 1000, Denver,
      CO 80203, Fax: (303) 866-0999. 

     

    “Debentures”
      means, the 10% Secured Debentures due, subject to the terms therein, to be
      issued by the Company to the Purchasers hereunder, in the form of Exhibit
A.
      

     

    “Disclosure
      Schedules” shall have the meaning ascribed to such term in Section
3.1.
      

     

    “Escrow
      Agent” shall have the meaning set forth in the Escrow Agreement.

     

    “Escrow
      Agreement” shall mean the Escrow Agreement in substantially the form of
      Exhibit B hereto executed and delivered contemporaneously with this Agreement.
      

     

    “Exchange”
      means the exchange of the Debentures for Exchange Debentures, Exchange Warrants
      and Exchange Additional Warrants as described in Section 4.5. 

     

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

     

    “Exchange
      Bonus Warrants” means an amount of Common Stock purchase warrants to be
      issued to the Purchasers upon the Exchange. Each Exchange Bonus Warrant will
      be
      exercisable for five years from the issue date of such Exchange Bonus Warrants
      for one share of Common stock. Each Purchaser will receive one Exchange Bonus
      Warrant for each four shares of Common Stock which would be issued on the
      closing date of the Exchange assuming the complete conversion of the Exchange
      Debentures at the conversion price of the Exchange Debentures then in effect.
      The exercise price of the Exchange Bonus Warrants will be the same as the
      conversion price of the debentures issued in the Qualified Offering. The holders
      of the Exchange Bonus Warrants will be granted all the rights and benefits
      granted the holders of the Exchange Warrants. 

    
      
        
        

      

      
        2

        
          

        

      

       

    

     

    “Exchange
      Debentures” means the debentures to be issued in exchange for the Debentures
      upon the occurrence of the Qualified Offering which will be identical to and
      carry the same rights as the debentures issuable in the Qualified Offering
      as
      described on the Term Sheet except that the conversion price of the Exchange
      Debentures shall be, at all times, 75% of the conversion price of the debentures
      issuable in the Qualified Offering. 

     

    “Exchange
      Securities” means the Exchange Debentures, Exchange Warrants and Exchange
      Bonus Warrants. 

     

    “Exchange
      Warrants” means the Common Stock purchase warrants or other Common Stock
      Equivalent to be issued to the Purchasers upon the occurrence of the Qualified
      Offering. 

     

    “Exempt
      Issuance” means the issuance of (a) shares of Common Stock or options to
      employees, officers or directors of the Company pursuant to any stock or option
      plan unanimously adopted by the Board of Directors of the Company or a majority
      of the members of a committee of directors established for such purpose, (b)
      securities upon the exercise of or conversion of any Securities issued
      hereunder, convertible securities, options or warrants issued and outstanding
      on
      the date of this Agreement, provided that such securities have not been amended
      since the date of this Agreement to increase the number of such securities
      or to
      decrease the exercise or conversion price of any such securities, (c) securities
      issued pursuant to acquisitions or strategic transactions, provided any such
      issuance shall only be to a non-affiliated Person which is, itself or through
      its subsidiaries, an operating company in a business synergistic with the
      business of the Company and in which the Company receives benefits in addition
      to the investment of funds, but shall not include a transaction in which the
      Company is issuing securities primarily for the purpose of raising capital
      or to
      an entity whose primary business is investing in securities, and (d) securities
      described on the Schedules hereto including compensation payable to the Broker
      for the transactions described in this Agreement and for the Qualified Offering.
      

     

    “Fully-Diluted
      Outstanding Capital Stock” means the sum of (i) the total number of then
      issued and outstanding shares of Common Stock and all other classes of capital
      stock of the Company, plus (ii) the total number of shares of all Common Stock
      and all other classes of capital stock of the Company into which all then issued
      and outstanding and fully-vested Common Stock Equivalents and other securities
      convertible, exchangeable or otherwise into other classes of capital stock
      of
      the Company may be converted, exchangeable or otherwise. 

     

    
      
        
        

      

      
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    “GAAP”
      shall have the meaning ascribed to such term in Section 3.1(h). 

     

    “GM”
      means Grushko & Mittman, P.C., with offices located at 551 Fifth Avenue,
      Suite 1601, New York, New York 10176, Fax: (212) 697-3575. 

     

    “Government
      Entity” shall have the meaning ascribed to such term in Section 4.22.
      

     

    “Intellectual
      Property Rights” shall have the meaning ascribed to such term in Section
      3.1(o). 

     

    “Liens”
      means a lien, charge,security interest, encumbrance, right of first refusal,
      preemptive right or other restriction. 

     

    “Listing
      Date” shall have the meaning ascribed to such term in Section 4.12(c).

     

    “Material
      Adverse Effect” shall have the meaning assigned to such term in Section
      3.1(b). 

     

    “Material
      Permits” shall have the meaning ascribed to such term in Section
3.1(m).

     

     “Maximum
      Rate” shall have the meaning ascribed to such term in Section
      5.17.

     

     “Participation
      Maximum” shall have the meaning ascribed to such term in Section
4.13.
      

     

    “Person”
      means an individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or other entity
      of any kind. 

     

    “Pre-Notice”
      shall have the meaning ascribed to such term in Section 4.13. 

     

    “Proceeding”
      means an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened. 

     

    “Purchaser
      Party” shall have the meaning ascribed to such term in Section 4.11.

     

    “Qualified
      Offering” shall mean an offering by the Company substantially on the terms
      and during the time periods set forth on the Term Sheet. 

     

    “Qualified
      Offering Closing Date” shall have the meaning ascribed to such term in
      Section 4.5. 

     

           
      “Records” means all documents, books, records and other information
      (including, without limitation, computer programs, tapes, disks, punch cards,
      data processing software and related property and rights) maintained with
      respect to the Company’s business. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Rule
      144” means Rule 144 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      effect as such Rule. 

     

    “Securities”
      means the Debentures. 

     

    “Securities
      Act” means the Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder. 

     

    “Security
      Agreement” means the Security Agreement, dated the date hereof, among the
      Company and the Purchasers, in the form of Exhibit D attached hereto.

     

    “Security
      Documents” shall mean the Security Agreement and any other documents and
      filing required thereunder in order to grant the Purchasers a first priority
      security interest in all of the assets of the Company, including all UCC-1
      filing receipts.

     

           “Subscription
      Amount” means, as to each Purchaser, the aggregate amount to be paid for
      Debentures purchased hereunder as specified below such Purchaser’s name on the
      signature page of this Agreement and next to the heading “Subscription Amount”,
      in United States Dollars and in immediately available funds. 

     

    “Subsequent
      Financing” shall have the meaning ascribed to such term in Section
4.13.
      

     

    “Subsequent
      Financing Notice” shall have the meaning ascribed to such term in Section
      4.13. 

     

    “Subsidiary”
      means any subsidiary of the Company as set forth on Schedule 3.1(a).
      

     

    “Term
      Sheet” means the term sheet annexed hereto as Exhibit G, describing the
      terms of the Qualified Offering. 

     

    “Trading
      Market” means, as applicable, the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question: the
      American Stock Exchange, the New York Stock Exchange, the Nasdaq National
      Market, the Nasdaq Capital Market or the OTC Bulletin Board. 

     

    “Transaction
      Documents” means this Agreement, the Debentures, the Security Agreement, and
      any other documents or agreements executed in connection with the transactions
      contemplated hereunder.

     

    
      
        
        

      

      
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    ARTICLE
      II. 

    PURCHASE
      AND SALE 

     

    2.1
      Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      concurrent with the execution and delivery of this Agreement by the parties
      hereto, the Company agrees to sell, and each Purchaser agrees to purchase in
      the
      aggregate, severally and not jointly, up to not less than $1,000,000 nor more
      than $1,500,000 principal amount of the Debentures. Each Purchaser shall deliver
      to the Escrow Agent via wire transfer for immediately available funds equal
      to
      their Subscription Amount and the Company shall deliver to each Purchaser its
      Debenture as determined pursuant to Section 2.2(a) and the other items set
      forth
      in Section 2.2 issuable at the Closing. Upon satisfaction of the conditions
      set
      forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of GM,
      or
      such other location as the parties shall mutually agree. 

     

    
      
        2.2
          Deliveries.
          

      

    

     

    
      	 	
              a)
                

            	
              On
                the Closing Date, the Company shall deliver or cause to be delivered
                to
                each Purchaser the following: 

            

    

     

    (i)
      this
      Agreement duly executed by the Company; 

     

    (ii)
      a
      legal
      opinion of Company Counsel, in the form of Exhibit C attached hereto;

     

    
      	
            	(iii) 
              	
              a
                Debenture with a principal amount equal to such Purchaser’s Subscription
                Amount, registered in the name of such Purchaser;
                

            

    

     

    (iv)
      the
      Security Agreement duly executed by the Company; 

     

    (vi)
      the
      Escrow Agreement duly executed by the Company; 

     

    (vii)
      the
      Collateral Agent Agreement duly executed by the Company; and 

     

    
      
        
          	
                	(viii) 
                  	
                  duly
                    executed lock-up agreements, in the form of Exhibit E attached
                    hereto,
                    from each officer, director, employee, consultant and advisor
                    of the
                    Company and from each shareholder of the Company owning more
                    than 5% of
                    the issued and outstanding shares of Common Stock (or Common
                    Stock
                    Equivalents on a fully converted basis), who are identified on
                    Schedule
                    2.2(a). 

                

        

      

    

     

    
      	 	
              b)
                

            	
              On
                the Closing Date, each Purchaser shall deliver or cause to be delivered
                to
                the Escrow Agent the following: 

            

    

     

    (i)
      this
      Agreement duly executed by such Purchaser; 

     

    
      	
            	(ii) 
              	
              such
                Purchaser’s Subscription Amount by wire transfer to the accounts
                specified in the Escrow Agreement; 

            

    

     

    
      
        
        

      

      
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        (iii)
          the
          Security Agreement, duly executed by such Purchaser; 

      

    

     

    (iv)
      the
      Escrow Agreement duly executed by such Purchaser; and 

     

    (v)
      the
      Collateral Agent Agreement duly executed by such Purchaser. 

    

    
      	
              2.3
                

            	
              Closing
                Conditions.
                

            

    

     

    
      	 	
              a)
                

            	
              The
                obligations of the Company hereunder in connection with the Closing
                are
                subject to the following conditions being met:

            

    

     

    
      	
            	(i) 
              	
              the
                accuracy in all material respects when made and on the Closing Date
                of the
                representations and warranties of the Purchasers contained herein;
                

            

    

     

    
      	
            	(ii) 	
              all
                obligations, covenants and agreements of the Purchasers required
                to be
                performed at or prior to the Closing Date shall have been performed;
                and
                

            

    

    

    
      
        (iii)
          the
          delivery by the Purchasers of the items set forth in Section 2.2(b) of
          this
          Agreement. 

      

    

     

    
      	 	
              b)
                

            	
              The
                respective obligations of the Purchasers hereunder in connection
                with the
                Closing are subject to the following conditions being met:
                

            

    

     

    
      	
            	(i) 
              	
              the
                accuracy in all material respects on the Closing Date of the
                representations and warranties of the Company contained herein;
                

            

    

     

    
      	
            	(ii) 
              	
              all
                obligations, covenants and agreements of the Company required to
                be
                performed at or prior to the Closing Date shall have been performed;
                

            

    

    

    
      
        (iii)
          the
          delivery by the Company of the items set forth in Section 2.2(a) of this
          Agreement; 

      

    

     

    
      	
            	(iv) 
              	
              there
                shall have been no Material Adverse Effect with respect to the Company
                since the date hereof; and 

            

    

     

    
      
        	
              	(v) 
                	
                from
                  the date hereof to the Closing Date, there shall not have been
                  a banking
                  moratorium declared either by the United States or New York State
                  authorities nor shall there have occurred any material outbreak
                  or
                  escalation of hostilities or other national or international calamity
                  of
                  such magnitude in its effect on, or any material adverse change
                  in, any
                  financial market which, in each case, in the reasonable judgment
                  of each
                  Purchaser, makes it impracticable
                  or inadvisable to purchase the Debentures at the Closing.
                  

              

      

    

     

    
      
        
        

      

      
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    ARTICLE
      III. 

    REPRESENTATIONS
      AND WARRANTIES 

     

    3.1
      Representations
      and Warranties of the Company.
      Except
      as set forth under the corresponding section of the disclosure schedules
      delivered to the Purchasers concurrently herewith (the “Disclosure
      Schedules”) which Disclosure Schedules shall be deemed a part hereof, the
      Company hereby makes the representations and warranties set forth below to
      each
      Purchaser. 

     

            
      (a)
      Subsidiaries.
      All of
      the direct subsidiaries of the Company are set forth on Schedule
      3.1(a).
      The
      Company owns all of the capital stock or other equity interests of each
      Subsidiary free and clear of any Liens, and all the issued and outstanding
      shares of capital stock of each Subsidiary are validly issued and are fully
      paid, non-assessable and free of preemptive and similar rights to subscribe
      for
      or purchase securities. If the Company has no subsidiaries, then references
      in
      the Transaction Documents to the Subsidiaries will be disregarded. 

      

          (b)
Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or financial condition of the Company and the Subsidiaries, taken
      as a
      whole, or (iii) a material adverse effect on the Company’s ability to perform in
      any material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification. 

      

             (c)
      Authorization; Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company. Each Transaction
      Document has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms except (i) as limited by applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally and (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies.   

     

    
      
        
        

      

      
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      (d)
      No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the other transactions contemplated
      thereby do not and will not: (i) conflict with or violate any provision of
      the
      Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
      or other organizational or charter documents, or (ii) conflict with, or
      constitute a default (or an event that with notice or lapse of time or both
      would become a default) under, result in the creation of any Lien upon any
      of
      the properties or assets of the Company or any Subsidiary, or give to others
      any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected, or
      (iii) conflict with or result in a violation of any law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which the Company or a Subsidiary is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of the Company or a Subsidiary is bound or affected; except
      in
      the case of each of clauses (ii) and (iii), such as could not have or reasonably
      be expected to result in a Material Adverse Effect. 

      

            
      (e) Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents. 

      

          (f)
Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be valid and binding obligations
      of
      the Company, enforceable against the Company in accordance with their terms
      except (i) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium and other laws of general application affecting enforcement of
      creditors’ rights generally and (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief and other equitable
      remedies..

    

          (g)
      Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(g).
      No
      Person has any right of first refusal, preemptive right, right of participation,
      or any similar right to participate in the transactions contemplated by the
      Transaction Documents. Except as a result of the purchase and sale of the
      Securities or as set forth on Schedule 3.1(g), there are no outstanding
      options, warrants, script rights to subscribe
      to, calls or commitments of any character whatsoever relating to, or securities,
      rights or obligations convertible into or exchangeable for, or giving any Person
      any right to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock
      or
      Common Stock Equivalents. The issuance and sale of the Securities will not
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Purchasers) and will not result in a right of any holder
      of Company securities to adjust the exercise, conversion, exchange or reset
      price under such securities. All of the outstanding shares of capital stock
      of
      the Company are validly issued, fully paid and nonassessable, have been issued
      in compliance with all federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or similar
      rights to subscribe for or purchase securities. No further approval or
      authorization of any stockholder, the Board of Directors of the Company or
      others is required for the issuance and sale of the Securities. Except as
      disclosed in Schedule 3.1(g), there are no stockholders agreements,
      voting agreements or other similar agreements with respect to the Company’s
      capital stock to which the Company is a party or, to the knowledge of the
      Company, between or among any of the Company’s stockholders. A complete list of
      stockholders of record, with their shareholdings as of March 31, 2006, and
      the
      Closing Date, is included in Schedule 3.1(g).  

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

           
      (h) Financial
      Statements.
      The
      unaudited financial statements of the Company for the fiscal year ended December
      31, 2005 and unaudited statements as of April 7, 2006, are attached hereto
      as
Schedule 3.1(h). Such financial statements fairly present in all material
      respects the financial position of the Company and its consolidated
      subsidiaries, if any, as of and for the dates thereof and the results of
      operations and cash flows for the periods then ended, subject to normal,
      immaterial adjustments. 

      

            
      (i) Material
      Changes.
      Since
      the date of the Company’s most recent financial statements, attached hereto as
Schedule 3.1(h), (i) there has been no event, occurrence or development
      that has had or that could reasonably be expected to result in a Material
      Adverse Effect, (ii) the Company has not incurred any liabilities (contingent
      or
      otherwise) other than (A) trade payables and accrued expenses incurred in the
      ordinary course of business consistent with past practice and (B) liabilities
      not required to be reflected in the Company’s financial statements pursuant to
      GAAP, (iii) the Company has not altered its method of accounting, (iv) the
      Company has not declared or made any dividend or distribution of cash or other
      property to its stockholders or purchased, redeemed or made any agreements
      to
      purchase or redeem any shares of its capital stock and (v) the Company has
      not
      issued any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option plans. 

      

            
      (j)Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which (i) adversely affects
      or challenges the legality, validity or enforceability of any of the Transaction
      Documents or the Securities or (ii) could, if there were an unfavorable
      decision, have or reasonably be expected to result in a Material Adverse Effect.
      Neither the Company nor any Subsidiary, nor any director or officer thereof,
      is
      or has been the subject of any Action involving a claim of violation of or
      liability under federal or state securities laws or a claim of breach of
      fiduciary duty. There has not been, and to the knowledge of the Company, there
      is not pending or contemplated, any investigation by the Commission involving
      the Company or any current or former director or officer of the
      Company.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

            
      (k) Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could reasonably
      be
      expected to result in a Material Adverse Effect. 

      

            
      (l)Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      except in each case as could not have a Material Adverse Effect. 

     

            
      (m)Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as listed on
Schedule 3.1(m), except where the failure to possess such permits could
      not have or reasonably be expected to result in a Material Adverse Effect
      (“Material Permits”), and neither the Company nor any Subsidiary has
      received any notice of proceedings relating to the revocation or modification
      of
      any Material Permit. 

      

           
      (n) Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases of which the Company
      and the Subsidiaries are in compliance in all material respects. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (o)Intellectual
      Property.
      

      

    (i)
      The
      term “Intellectual Property Rights” includes: 

      

    
      	
            	1.	
              
                the
                  name of the Company, all fictional business names, trading names,
                  registered and unregistered trademarks, service marks, and applications
                  (collectively, “Marks'');

              

            

    

     

    
      	
            	2.	
              all
                patents, patent applications, and inventions and discoveries that
                may be
                patentable (collectively, “Patents'');

            

    

     

    
      	
            	3.	
              all
                copyrights in both published works and published works (collectively,
                “Copyrights”); 

            

    

     

    
      	
            	4.	
              all
                rights in mask works (collectively, “Rights in Mask Works''); and
                

            

    

     

    
      	
            	5.	
              all
                know-how, trade secrets, confidential information, customer lists,
                software, technical information, data, process technology, plans,
                drawings, and blue prints (collectively, “Trade Secrets''); owned,
                used, or licensed by the Company as licensee or licensor.
                

            

    

     

    (ii)
      Agreements.
      Schedule 3.1(o) contains a complete and accurate list and summary
      description including any royalties paid or received by the Company, of all
      contracts relating to the Intellectual Property Rights to which the Company
      is a
      party or by which the Company is bound, except for any license implied by the
      sale of a product and perpetual, paid-up licenses for commonly available
      software programs with a value of less than $2,500 under which the Company
      is
      the licensee. There are no outstanding and, to Company’s knowledge, no
      threatened disputes or disagreements with respect to any such agreement.

     

    (iii)
      Know-How
      Necessary for the Business.
      The
      Intellectual Property Rights are all those necessary for the operation of the
      Company’s businesses as it is currently conducted or as reflected in the
      business plan given to the Purchaser. The Company is the owner of all right,
      title, and interest in and to each of the Intellectual Property Rights, free
      and
      clear of all liens, security interests, charges, encumbrances, equities, and
      other adverse claims, and has the right to use without payment to a third party
      all of the Intellectual Property Rights. Except as set forth in Schedule
      3.1(o), all former and current employees of the Company and inventors or
      creators of the Intellectual Property Rights have executed written contracts
      with the Company that assign to the Company all rights to any inventions,
      improvements, discoveries, or information relating to the business of the
      Company. To the Company’s knowledge, no employee of the Company has entered into
      any contract that restricts or limits in any way the scope or type
      of
      work in which the employee may be engaged or requires the employee to transfer,
      assign, or disclose information concerning his work to anyone other than of
      the
      Company. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (iv)
      Know-How
      Necessary for the Business.
      Schedule 3.1(o) contains a complete and accurate list and summary description
      of
      all Patents. The Company is the owner of all right, title and interest in and
      to
      each of the Patents, free and clear of all liens, security interests, charges,
      encumbrances, entities, and other adverse claims. All of the issued Patents
      are
      currently in compliance with formal legal requirements (including payment of
      filing, examination, and maintenance fees and proofs of working or use), are
      valid and enforceable, and are not subject to any maintenance fees or taxes
      or
      actions falling due within ninety days after the Closing Date. No patent has
      been or is now involved in any interference, reissue, reexamination, or
      opposition proceeding. To the Company’s knowledge, there is no potentially
      interfering patent or patent application of any third party. No Patent is
      infringed or, to the Company’s knowledge, has been challenged or threatened in
      any way. To the Company’s knowledge, none of the products manufactured and sold,
      nor any process or know-how used, by the Company infringes or is alleged to
      infringe any patent or other proprietary right of any other Person. All products
      made, used, or sold under the Patents have been marked with the proper patent
      notice. 

     

    (v)
      Trademarks.
      Schedule 3.1(o) contains a complete and accurate list and summary
      description of all Marks. The Company is the owner of all right, title, and
      interest in and to each of the Marks, free and clear of all liens, security
      interests. charges, encumbrances, equities, and other adverse claims. All Marks
      that have been registered with the United States Patent and Trademark Office
      are
      currently in compliance with all formal legal requirements (including the timely
      post-registration tiling of affidavits of use and incontestability and renewal
      applications), are valid and enforceable, and are not subject to any maintenance
      fees or taxes or actions falling due within ninety days after the Closing Date.
      No Mark has been or is now involved in any opposition, invalidation, or
      cancellation and, to the Company’s knowledge, no such action is threatened with
      respect to any of the Marks. To the Company’s knowledge, there is no potentially
      interfering trademark or trademark application of any third party. No Mark
      is
      infringed or, to the Company’s knowledge, has been challenged or threatened in
      any way. To the Company’s knowledge, none of the Marks used by the Company
      infringes or is alleged to infringe any trade name, trademark, or service mark
      of any third party. All products and materials containing a Mark bear the proper
      federal registration notice where permitted by law. 

     

    (vi)
      Copyrights.
      Schedule 3.1(o) contains a complete and accurate list and
      summary description of all Copyrights. The Company is the owner of all right,
      title, and interest in and to each of the Copyrights, free and clear of all
      liens, security interests, charges, encumbrances, equities, and other adverse
      claims. All the Copyrights have been registered and are currently in compliance
      with formal requirements, are valid and enforceable, and are not subject to
      any
      maintenance fees or taxes or actions falling due within one year after the
      date
      of Closing. No Copyright is infringed or, to the Company’s knowledge, has been
      challenged or threatened in any way. To the Company’s knowledge, none of the
      subject matter of any of the Copyrights infringes or is alleged to infringe
      any
      copyright of any third party or is a derivative work based on the work of a
      third party. All works encompassed by the Copyrights have been marked with
      the
      proper copyright notice. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    (vii)
      Trade
      Secrets.
      With
      respect to each Trade Secret, the documentation relating to such Trade Secret
      is
      current, accurate, and sufficient in detail and content to identify and explain
      it and to allow its full and proper use without reliance on the knowledge or
      memory of any individual. The Company has taken all reasonable precautions
      to
      protect the secrecy, confidentiality, and value of its Trade Secrets. The
      Company has good title and an absolute (but not necessarily exclusive) right
      to
      use the Trade Secrets. The Trade Secrets are not part of the public knowledge
      or
      literature, and, to the Company’s knowledge, have not been used, divulged, or
      appropriated either for the benefit of any Person (other the Company) or to
      the
      detriment of the Company. No Trade Secret is subject to any adverse claim or
      has
      been challenged or threatened in any way. 

     

           
      (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged. To the best of Company’s knowledge, such insurance contracts and
      policies are accurate and complete. Neither the Company nor any 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 without a
      significant increase in cost. 

     

           
      (q) Transactions
      With Affiliates and Employees.
      Except
      as set forth in Schedule 3.1(q), none of the officers or directors of the
      Company and, to the knowledge of the Company, none of the employees of the
      Company are presently a party to any transaction with the Company or any
      Subsidiary (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 entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $10,000.
      

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

           
      (r) Internal
      Accounting Controls.
      The
      Company and the Subsidiaries maintain a system of internal accounting controls
      which the Company believes is 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 GAAP and to maintain
      asset accountability, (iii) access to assets is permitted only in accordance
      with management's general or specific authorization, and (iv) the recorded
      accountability for assets is compared with the existing assets at reasonable
      intervals and appropriate action is taken with respect to any differences..
      

     

        (s)
      Certain
      Fees.
      Except
      as set forth on Schedule 3.1(s), no brokerage or finder’s fees or
      commissions are or will be payable by the Company to any broker, financial
      advisor or consultant, finder, placement agent, investment banker, bank or
      other
      Person with respect to the transactions contemplated by this Agreement. The
      Purchasers shall have no obligation with respect to any fees or with respect
      to
      any claims made by or on behalf of other Persons for fees of a type contemplated
      in this Section that may be due in connection with the transactions contemplated
      by this Agreement. 

     

           
      (t) Private
      Placement.
      Assuming the accuracy of the Purchasers’ representations and warranties set
      forth in Section 3.2, no registration under the Securities Act is required
      for
      the offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. 

     

            
      (u) Investment Company. The Company is not, and is not an Affiliate of,
      and immediately after receipt of payment for the Securities, will not be or
      be
      an Affiliate of, an “investment company” within the meaning of the Investment
      Company Act of 1940, as amended. The Company shall conduct its business in
      a
      manner so that it will not become subject to the Investment Company Act.

     

            
      (v) Registration
      Rights.
      No
      Person has any right to cause the Company to effect the registration under
      the
      Securities Act of any securities of the Company. 

     

            
      (w) Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a result
      of the Purchasers and the Company fulfilling their obligations or exercising
      their rights under the Transaction Documents, including without limitation
      as a
      result of the Company’s issuance of the Securities, the Purchasers’ ownership of
      the Securities or the Exchange. 

     

            
       (x) Disclosure.
      The
      Company understands and confirms that the Purchasers will rely on the foregoing
      representations and covenants in effecting transactions in securities of the
      Company. All disclosure provided to the Purchasers regarding the Company, its
      business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, furnished by or on behalf of the Company with
      respect to the representations and warranties made herein are true and correct
      with respect to such representations and warranties and do not contain any
      untrue statement of a material fact or omit to state any material fact necessary
      in order to make the statements made therein, in light of the circumstances
      under which they were made, not misleading. The Company acknowledges and agrees
      that no Purchaser makes or has made any representations or warranties with
      respect to the transactions contemplated hereby other than those specifically
      set forth in Section 3.2 hereof. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

          (y)
No
      Integrated
      Offering. Assuming the accuracy of the Purchasers’ representations and
      warranties set forth in Section 3.2, 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 cause this offering of the
      Securities to be integrated with prior offerings by the Company for purposes
      of
      the Securities Act or any applicable shareholder approval provisions.

      

           
      (z) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the Company’s fair saleable value of its assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii)
      the
      Company’s assets do not constitute unreasonably small capital to carry on its
      business for the current fiscal year as now conducted and as proposed to be
      conducted including its capital needs taking into account the particular capital
      requirements of the business conducted by the Company, and projected capital
      requirements and capital availability thereof; and (iii) the current cash flow
      of the Company, together with the proceeds the Company would receive, were
      it to
      liquidate all of its assets, after taking into account all anticipated uses
      of
      the cash, would be sufficient to pay all amounts on or in respect of its debt
      when such amounts are required to be paid. The Company does not intend to incur
      debts beyond its ability to pay such debts as they mature (taking into account
      the timing and amounts of cash to be payable on or in respect of its debt).
      

     

           
      (aa) Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary. 

     

           
      (bb) No General Solicitation. Neither the Company nor any person acting
      on behalf of the Company has offered or sold any of the Securities by any form
      of general solicitation or general advertising. The Company has offered the
      Securities for sale only to the Purchasers and certain other “accredited
      investors” within the meaning of Rule 501 under the Securities Act.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

         
(cc)
Foreign
      Corrupt Practices.
      Neither the Company, nor to the knowledge of the Company, any agent or other
      person acting on behalf of the Company, has (i) directly or indirectly, used
      any
      funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses related to foreign or domestic political activity, (ii) made any
      unlawful payment to foreign or domestic government officials or employees or
      to
      any foreign or domestic political parties or campaigns from corporate funds,
      (iii) failed to disclose fully any contribution made by the Company (or made
      by
      any person acting on its behalf of which the Company is aware) which is in
      violation of law, or (iv) violated in any material respect any provision of
      the
      Foreign Corrupt Practices Act of 1977, as amended. 

     

           
      (dd) Accountants.
      The
      Company’s accountants are set forth on Schedule 3.1(dd) of the Disclosure
      Schedule. 

     

           
      (ee) Indebtedness
      and Seniority.
      As of
      the date hereof, all indebtedness and liens of the Company are as set forth
      on
Schedule 3.1(ee). As of the Closing Date, no indebtedness or other equity
      of the Company is senior to the Debentures in right of payment, whether with
      respect to interest or upon liquidation or dissolution, or otherwise, other
      than
      indebtedness secured by purchase money security interests (which is senior
      only
      as to underlying assets covered thereby) and capital lease obligations (which
      is
      senior only as to the property covered thereby). 

     

           
      (ff) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect to
      any
      fees owed to its accountants and lawyers. 

     

           
      (gg) Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated hereby. The Company further
      acknowledges that no Purchaser is 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 any Purchaser or any
      of
      their respective representatives or agents in connection with this Agreement
      and
      the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
      that the Company’s decision to enter into this Agreement has been based solely
      on the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives. 

     

          (hh)
Manufacturing
      and Marketing Rights.
      Except
      as described on Schedule 3.1(hh), the Company has not granted rights to
      manufacture, produce, assemble, license, market, or sell its products to any
      other Person and is not bound by any agreement that affects the Company’s
      exclusive right to develop, manufacture, assemble, distribute, market or sell
      its products. 

    
      
        
        

      

      
        17

        
          

        

      

       

    

    

           
      (ii) Employees.
      The
      Company has no collective bargaining agreements with any of its employees.
      There
      is no labor union organizing activity pending or, to the Company’s knowledge,
      threatened with respect to the Company. Except as set forth on Schedule
      3.1(ii), the Company is not a party to or bound by any currently effective
      employment contract, deferred compensation arrangement, bonus plan, incentive
      plan, profit sharing plan, retirement agreement or other employee compensation
      plan or agreement. To the Company’s knowledge, no employee of the Company, nor
      any consultant with whom the Company has contracted, is in violation of any
      term
      of any employment contract, proprietary information agreement or any other
      agreement relating to the right of any such individual to be employed by, or
      to
      contract with, the Company because of the nature of the business to be conducted
      by the Company; and to the Company’s knowledge the continued employment by the
      Company of its present employees, and the performance of the Company’s contracts
      with its independent contractors, will not result in any such violation. The
      Company has not received any notice alleging that any such violation has
      occurred. No employee of the Company has been granted the right to continued
      employment by the Company or to any material compensation following termination
      of employment with the Company. The Company is not aware that any officer,
      key
      employee or group of employees intends to terminate his, her or their employment
      with the Company nor does the Company have a present intention to terminate
      the
      employment of any officer, key employee or group of employees. 

     

           
      (jj) Obligations of Management. The Company’s Chief Executive Officer,
      Howard Leventhal, is currently devoting substantially all of his business time
      to the conduct of business of the Company. The Company is not aware that Howard
      Levanthal is planning to work less than full time at the Company in the future.
      No officer or key employee is the currently working or, to the Company’s
      knowledge, plans to work for a competitive enterprise, whether or not such
      officer of key employee is or will be compensated by such enterprise.

     

    (kk)
      Environmental
      and Safety Laws.
      Except
      as set forth in Schedule 3.1(kk): 

     

     (i)
      The
      Company is, and at all times has been, in full compliance with, and has not
      been
      and is not in violation of or liable under, any Environmental Law. The Company
      has no basis to expect, nor has it or any other Person for whose conduct it
      is
      or may be held to be responsible received, any actual or threatened order,
      notice, or other communication from (i) any governmental body or private citizen
      acting in the public interest, or (ii) the current or prior owner or operator
      of
      any facilities, of any actual or potential violation or failure to comply with
      any Environmental Law, or of any actual or threatened obligation to undertake
      or
      bear the cost of any environmental, health, and safety liabilities with respect
      to any of the facilities or any other properties or assets (whether real,
      personal, or mixed) in which the Company has had an interest, or with respect
      to
      any property or facility at or to which Hazardous Materials were generated,
      manufactured, refined, transferred, imported, used, or processed
      by the Company, or any other Person for whose conduct it are or may be held
      responsible, or from which Hazardous Materials have been transported, treated,
      stored, handled, transferred, disposed, recycled, or received. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (ii)
      There are no pending or, to the knowledge of the Company, threatened claims,
      encumbrances, or other restrictions of any nature, resulting from any
      environmental, health, and safety liabilities or arising under or pursuant
      to
      any Environmental Law, with respect to or affecting any of the facilities or
      any
      other properties and assets (whether real, personal, or mixed) in which the
      Company has or had an interest. 

    

    (iii)
      The
      Company has no knowledge of any basis to expect, nor has it or any other Person
      for whose conduct it is or may be held responsible, received, any citation,
      directive, inquiry, notice, order, summons, warning, or other communication
      that
      relates to Hazardous Materials, or any alleged, actual, or potential violation
      or failure to comply with any Environmental Law, or of any alleged, actual,
      or
      potential obligation to undertake or bear the cost of any environmental, health,
      and safety liabilities with respect to any of the facilities or any other
      properties or assets (whether real, personal, or mixed) in which the Company
      had
      an interest, or with respect to any property or facility to which Hazardous
      Materials generated, manufactured, refined, transferred, imported, used, or
      processed by the Company, or any other Person for whose conduct it is or may
      be
      held responsible, have been transported, treated, stored, handled, transferred,
      disposed, recycled, or received. 

     

    (iv)
      Neither the Company nor any other Person for whose conduct it is or may be
      held
      responsible, had any environmental, health, and safety liabilities with respect
      to the facilities or, to the knowledge of the Company, with respect to any
      other
      properties and assets (whether real, personal, or mixed) in which the Company
      (or any predecessor), has or had an interest, or at any property geologically
      or
      hydrologically adjoining the facilities or any such other property or assets.
      

     

    (v)
      There
      are no Hazardous Materials present on or in the environment at the facilities
      or
      at any geologically or hydrologically adjoining property, including any
      Hazardous Materials contained in barrels, above or underground storage tanks,
      landfills, land deposits, dumps, equipment (whether moveable or fixed) or other
      containers, either temporary or permanent, and deposited or located in land,
      water, sumps, or any other part of the facilities or such adjoining property,
      or
      incorporated into any structure therein or thereon. Neither the Company nor
      any
      other Person for whose conduct it is or may be held responsible, or to the
      knowledge of the Company, any other Person, has permitted or conducted, or
      is
      aware of, any hazardous activity conducted with respect to the facilities or
      any
      other properties
      or assets (whether real, personal, or mixed) in which the Company has or had
      an
      interest except in full compliance with all applicable Environmental Laws.
      

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     (vi)
      There has been no release or, to the knowledge of the Company, threat of
      release, of any Hazardous Materials at or from the facilities or at any other
      locations where any Hazardous Materials were generated, manufactured, refined,
      transferred, produced, imported, used, or processed from or by the facilities,
      or from or by any other properties and assets (whether real, personal, or mixed)
      in which the Company has or had an interest, or to the knowledge of the Company
      any geologically or hydrologically adjoining property, whether by the Company,
      or any other Person. 

    

    (vii)
      The
      Company has delivered to the Purchasers true and complete copies and results
      of
      any reports, studies, analyses, tests, or monitoring possessed or initiated
      by
      the Company pertaining to Hazardous Materials in, on, or under the facilities,
      or concerning compliance by the Company, or any other Person for whose conduct
      they are or may be held responsible, with Environmental Laws. 

     

    (viii)
      For the purpose of this Section, Hazardous Material shall mean (i) materials
      which are listed or otherwise defined as “hazardous” or “toxic” under any
      applicable federal, local or stated and/or foreign laws and regulations that
      govern the existence and/or remedy of contamination on property, the protection
      of the environment from contamination, the control of the hazardous wastes,
      or
      other activities involving hazardous substances, including building materials
      or
      (b) petroleum products or nuclear materials. 

     

    (ix)
      For
      the purpose of this Section 3.1(kk), “Environmental Law” shall have the
      following meaning: 

     

    
      	
            	1.	
              advising
                appropriate authorities, employees, and the public intended or actual
                releases of pollutants or hazardous substances or material, violations
                of
                discharge limits, or other prohibitions and of the commencements
                of
                activities, such as resource extraction or construction, that could
                have
                significant impact on the environment;

            

    

     

    
      	
            	2.	
              preventing
                or reducing to acceptable levels the release of pollutants or hazardous
                substances or materials into the environment;

            

    

     

    
      	
            	3.	
              reducing
                the quantities, preventing the release, or minimizing the hazardous
                characterics of waste that are generated;

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	
            	4.	
              assuring
                that products are designed, formulated, packaged, and used so that
                they do
                not present unreasonable risks to human health or the environment
                when
                used or disposed of; 

            

    

    

    
      	
            	5.	
              protecting
                resources, species or ecological amenities;

            

    

     

    
      	
            	6.	
              reducing
                to acceptable levels the risk inherent in the transportation of hazardous
                substances, pollutants, oil or other potentially harmful substances;
                

            

    

     

    
      	
            	7.	
              cleaning
                up pollutants that have been released, preventing the threat of release
                or
                paying the costs of such clean up or prevention; or
                

            

    

     

    
      	
            	8.	
              making
                responsible parties pay private parties, or groups of them, for damages
                done to their health or to the environment, or permitting self appointed
                representatives of the public interest to recover for injuries done
                to
                public assets. 

            

    

    

    (ll)   
      Minute Books. The minute books of the Company made available to the
      Purchasers contain a complete summary of all meetings of directors and
      stockholders since the time of incorporation. 

     

    (mm)
      Elections.
      To the
      Company’s knowledge, all elections and notices permitted by Section 83(b) of the
      Code and any analogous provisions of applicable state tax laws have been timely
      filed by all employees who have purchased shares of the Common Stock under
      agreements that provide for the vesting of such shares of Common Stock.

     

    (nn)
      Accounts
      Receivable.
      All
      accounts receivable of the Company and its Subsidiaries that are reflected
      on
      the Company’s balance sheet or interim balance sheet or on the accounting
      records of the Company and its Subsidiaries as of the Closing Date
      (collectively, the “Accounts Receivable”) represent or will represent
      valid obligations arising from sales actually made or services actually
      performed in the ordinary course of business. Unless paid prior to the Closing
      Date, the Accounts Receivable are or will be as of the Closing Date current
      and
      collectible net of the respective reserves shown on the balance sheet or interim
      balance sheet or on the accounting records of the Company and its Subsidiaries
      as of the Closing Date (which reserves are adequate and calculated consistent
      with past practice and, in the case of the reserve as of the Closing Date,
      will
      not represent a greater percentage of the Accounts Receivable as of the Closing
      Date than the reserve reflected in the interim balance sheet represented of
      the
      Accounts Receivable reflected therein and will not represent a material adverse
      change in the composition of such Accounts Receivable in terms of aging).
      Subject to such reserves, each of the Accounts Receivable either has been or
      will be collected in full without any set-off, within ninety days after the
      day
      on which it must becomes due and payable. There is no contest, claim, or right
      of set-off, other than returns in the ordinary course of business, under any
      agreement and/or contract with any obligor of an Accounts Receivable relating
      to
      the amount or validity of such Accounts Receivable. Schedule 3.1(nn)
      contains a complete and accurate list of all Accounts Receivable as of the
      date
      of the interim balance sheet, which list sets forth the aging of such Accounts
      Receivable. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (oo)
      Inventory. All inventory of the Company and the Subsidiaries, whether or
      not reflected in the balance sheet or interim balance sheet, consists of a
      quality and quantity usable and salable in the ordinary course of business,
      except for obsolete items and items of below standard quality, all of which
      have
      been written off or written down to net realizable value in the balance sheet
      or
      interim balance sheet or on the accounting records of the Company and the
      Subsidiaries as of the Closing Date, as the case may be. All inventories not
      written off have been priced at the lower of cost or market on the last in,
      first out basis. The quantities of each item of inventory (whether raw
      materials, work-in-process, or finished goods) are not excessive, but are
      reasonable in the present circumstances of the Company and the Subsidiaries.
      

     

    (pp)
      Employee
      Benefits:
      Except
      as set forth on Schedule 3.1(pp), the Company has no plans which are
      subject to ERISA. “ERISA” means the Employee Retirement Income Security
      Act of 1974 or any successor law, and regulations and rules issued pursuant
      to
      that Act or any successor law. 

     

    (qq)
      Material
      Agreements.
      Schedule 3.1(qq) sets forth all agreements of the Company that would
      otherwise be required to be filed with the Commission pursuant to the Exchange
      Act, if the Company were subject to the reporting requirements of the Exchange
      Act. 

     

    (rr)
      Subsidiary
      Representations.
      All of
      the representations, warranties and disclosure described in Article III of
      this
      Agreement are hereby made by the Company with respect to each of the
      Subsidiaries. All such disclosure is made on the Schedules hereto with respect
      to the Subsidiaries. 

     

    3.2
      Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as follows:
      

     

           
(a)
Organization;
      Authority.
      Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations thereunder. The execution, delivery and performance by
      such
      Purchaser of the transactions contemplated by this Agreement have been duly
      authorized by all necessary corporate or similar action on the part of such
      Purchaser. Each Transaction Document to which it is a party has been duly
      executed by such Purchaser, and when delivered by such Purchaser in accordance
      with the terms hereof, will constitute the valid and legally binding obligation
      of such Purchaser, enforceable against it in accordance with its terms, except
      (i) as limited by general equitable principles and applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors’ rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law. 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

            
      (b) Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not limiting
      such Purchaser’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws) in violation of the Securities Act or any applicable state
      securities law. Such Purchaser is acquiring the Securities hereunder in the
      ordinary course of its business. Such Purchaser does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities. 

     

          (c)
Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and at the date hereof
      it is, and on each date on which it Exchanges any Debentures it will be either:
      (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
      (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
      buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
      not required to be registered as a broker-dealer under Section 15 of the
      Exchange Act. 

     

          (d)
Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment. 

     

          (e)
      General Solicitation.
      Such
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement. 

     

    The
      Purchasers acknowledge that the Company will be relying on the foregoing
      representations and warranties in making a determination as to the availability
      of federal and state securities laws exemptions. The Company acknowledges and
      agrees that each Purchaser does not make or has not made any representations
      or
      warranties with respect to the transactions contemplated hereby other than
      those
      specifically set forth in this Section 3.2. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV. 

    OTHER
      AGREEMENTS OF THE PARTIES 

     

    4.1
      Transfer
      Restrictions.
      

     

           
      (a) The Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement. 

     

    (b)
      The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1(b), of a legend on any of the Securities in the following form:

    

    [NEITHER]
      THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
      EXCHANGEABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXCHANGE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER
      LOAN SECURED BY SUCH SECURITIES. 

     

    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and, if required under the terms of such arrangement, such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such
      a pledge or transfer would not be subject to approval of the Company and no
      legal opinion of legal counsel of the pledgee, secured party or pledgor shall
      be
      required in connection therewith. Further, no notice shall be required of such
      pledge. At the appropriate Purchaser’s expense, the Company will execute and
      deliver such reasonable documentation as a pledgee or secured party of
      Securities may reasonably request in connection with a pledge or transfer of
      the
      Securities. 

    
      
        
        

      

      
        24

        
          

        

      

       

    

     

           
      4.2 Acknowledgment
      of Dilution.
      The
      Company acknowledges that the issuance of the Exchange Securities may result
      in
      dilution of the outstanding shares of Common Stock, which dilution may be
      substantial under certain market conditions. The Company further acknowledges
      that its obligations under the Transaction Documents, including without
      limitation its obligation to issue the Exchange Securities pursuant to the
      Transaction Documents, are unconditional and absolute and not subject to any
      right of set off, counterclaim, delay or reduction, regardless of the effect
      of
      any such dilution or any claim the Company may have against any Purchaser and
      regardless of the dilutive effect that such issuance may have on the ownership
      of the other stockholders of the Company. 

     

          4.3
Furnishing
      of Information.
      If
      after the date hereof the Company becomes subject to the reporting requirements
      of the Exchange Act and as long as any Purchaser owns Securities, the Company
      covenants to timely file (or obtain extensions in respect thereof and file
      within the applicable grace period) all reports required to be filed by the
      Company after the date hereof pursuant to the Exchange Act. 

     

          4.4
Integration.
      The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities and
      Exchange Securities in a manner that would require the registration under the
      Securities Act of the sale of the Securities or Exchange Securities to the
      Purchasers or that would be integrated with the offer or sale of the Securities
      or Exchange Securities for purposes of the rules and regulations of any Trading
      Market. 

     

          4.5
Qualified
      Offering Exchange.
      Upon
      the closing of the Qualified Offering (“Qualified Offering Closing
      Date”), each Debenture shall automatically and without further action of the
      parties represent the ownership of an Exchange Debenture in a principal amount
      equal to the outstanding principal amount of the Debenture and accrued interest
      thereon through the Qualified Offering Closing Date. The Company shall deliver
      to the Purchaser such Exchange Debenture within five Business Days after the
      Qualified Offering Closing Date, together with the appropriate amount of
      Exchange Warrants and Exchange Bonus Warrants. Within five days after receipt
      by
      the Purchaser of the Exchange Securities, the Purchaser will deliver the
      Debenture to the Company. Failure to timely deliver the Exchange Securities
      is
      an Event of Default under the Debenture and a material default under the terms
      of the Exchange Debenture. 

     

          4.6
Securities
      Laws Disclosure; Publicity.
      The
      Company and each Purchaser shall consult with each other in issuing any other
      press releases with respect to the transactions contemplated
      hereby, and neither the Company nor any Purchaser shall issue any such press
      release or otherwise make any such public statement without the prior consent
      of
      the Company, with respect to any press release of any Purchaser, or without
      the
      prior consent of each Purchaser, with respect to any press release of the
      Company, which consent shall not unreasonably be withheld, except if such
      disclosure is required by law, in which case the disclosing party shall promptly
      provide the other party with prior notice of such public statement or
      communication. Notwithstanding the foregoing, the Company shall not publicly
      disclose the name of any Purchaser, or include the name of any Purchaser in
      any
      filing with the Commission or any regulatory agency or Trading Market, without
      the prior written consent of such Purchaser, except (i) as required by federal
      securities law in connection with the filing of a registration statement and
      (ii) to the extent such disclosure is required by law or Trading Market
      regulations, in which case the Company shall provide the Purchasers with prior
      notice of such disclosure permitted under subclause (i) or (ii). 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

           
      4.7 Shareholder
      Rights Plan.
      No
      claim will be made or enforced by the Company or, to the knowledge of the
      Company, any other Person that any Purchaser is an “Acquiring Person” under any
      shareholder rights plan or similar plan or arrangement in effect or hereafter
      adopted by the Company, or that any Purchaser could be deemed to trigger the
      provisions of any such plan or arrangement, by virtue of receiving Securities
      under the Transaction Documents or under any other agreement between the Company
      and the Purchasers. The Company shall conduct its business in a manner so that
      it will not become subject to the Investment Company Act. 

     

           
      4.8 Non-Public
      Information.
      If at
      any time the Company becomes subject to the reporting provisions of the Exchange
      Act, the Company covenants and agrees that neither it nor any other Person
      acting on its behalf will provide any Purchaser or its agents or counsel with
      any information that the Company believes constitutes material non-public
      information, unless prior thereto such Purchaser shall have executed a written
      agreement regarding the confidentiality and use of such information. The Company
      understands and confirms that each Purchaser shall be relying on the foregoing
      representations in effecting transactions in securities of the Company.

     

           
      4.9 Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      for
      the purposes set forth on Schedule 4.9 and not to redeem any Common Stock
      or Common Stock Equivalents or to settle any outstanding litigation.

     

            
      4.10 Reimbursement.
      If any
      Purchaser becomes involved in any capacity in any Proceeding by or against
      any
      Person who is a stockholder of the Company (except as a result of sales,
      pledges, margin sales and similar transactions by such Purchaser to or with
      any
      current stockholder), solely as a result of such Purchaser’s acquisition of the
      Securities under this Agreement, the Company will reimburse such Purchaser
      for
      its reasonable legal and other expenses (including the cost of any investigation
      preparation and travel in connection therewith) incurred in connection
      therewith, as such expenses are incurred. The reimbursement obligations of
      the
      Company under this paragraph shall be in addition to any liability which the
      Company may otherwise have, shall extend upon the same terms and conditions
      to
      any Affiliates of the Purchasers who are actually named in such action,
      proceeding or investigation, and partners, directors, agents, employees and
      controlling persons (if any), as the case may be, of the Purchasers and any
      such
      Affiliate, and shall be binding upon and inure to the benefit of any successors,
      assigns, heirs and personal representatives of the Company, the Purchasers
      and
      any such Affiliate and any such Person. The Company also agrees that neither
      the
      Purchasers nor any such Affiliates, partners, directors, agents, employees
      or
      controlling persons shall have any liability to the Company or any Person
      asserting claims on behalf of or in right of the Company solely as a result
      of
      acquiring the Securities under this Agreement. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

           
      4.11 Indemnification
      of Purchasers.
      Subject
      to the provisions of this Section 4.11, the Company will indemnify and hold
      the
      Purchasers and their directors, officers, shareholders, partners, employees
      and
      agents (each, a “Purchaser Party”) harmless from any and all losses,
      liabilities, obligations, claims, contingencies, damages, costs and expenses,
      including all judgments, amounts paid in settlements, court costs and reasonable
      attorneys’ fees and costs of investigation that any such Purchaser Party may
      suffer or incur as a result of or relating to (a) any breach of any of the
      representations, warranties, covenants or agreements made by the Company in
      this
      Agreement or in the other Transaction Documents or (b) any action instituted
      against a Purchaser, or any of them or their respective Affiliates, by any
      stockholder of the Company who is not an Affiliate of such Purchaser, with
      respect to any of the transactions contemplated by the Transaction Documents
      (unless such action is based upon a breach of such Purchaser’s representations,
      warranties or covenants under the Transaction Documents or any agreements or
      understandings such Purchaser may have with any such stockholder or any
      violations by the Purchaser of state or federal securities laws or any conduct
      by such Purchaser which constitutes fraud, gross negligence, willful misconduct
      or malfeasance). If any action shall be brought against any Purchaser Party
      in
      respect of which indemnity may be sought pursuant to this Agreement, such
      Purchaser Party shall promptly notify the Company in writing, and the Company
      shall have the right to assume the defense thereof with counsel of its own
      choosing. Any Purchaser Party shall have the right to employ separate counsel
      in
      any such action and participate in the defense thereof, but the fees and
      expenses of such counsel shall be at the expense of such Purchaser Party except
      to the extent that (i) the employment thereof has been specifically authorized
      by the Company in writing, (ii) the Company has failed after a reasonable period
      of time to assume such defense and to employ counsel or (iii) in such action
      there is, in the reasonable opinion of such separate counsel, a material
      conflict on any material issue between the position of the Company and the
      position of such Purchaser Party. The Company will not be liable to any
      Purchaser Party under this Agreement (i) for any settlement by a Purchaser
      Party
      effected without the Company’s prior written consent, which shall not be
      unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
      that a loss, claim, damage or liability is attributable to any Purchaser Party’s
      breach of any of the representations, warranties, covenants or agreements made
      by the Purchasers in this Agreement or in the other Transaction Documents.
      

     

    4.12
      Reservation,
      Registration and Listing of Common Stock.
      

     

           
      (a) The Company shall maintain a reserve from its duly authorized shares of
      Common Stock for issuance pursuant to the Transaction Documents in such amount
      as may be required to fulfill its obligations in full under the Transaction
      Documents. 

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

           
      (b) Not later than 270 days after the date of this Agreement, the Company shall
      cause the Common stock to be registered pursuant to Section 12(g) of the
      Exchange Act and become subject to the reporting provisions of the Exchange
      Act.

     

           
      (c) The Company shall, in the time and manner required by a Trading Market,
      prepare and file with such Trading Market a listing application covering its
      Common Stock take all steps necessary to cause the Common Stock to be approved
      for listing and actually listed on the Trading Market not later than one year
      after the date of this Agreement (“Listing Date”), (iii) provide to the
      Purchasers evidence of such listing, and (iv)
      maintain the listing of such Common Stock for not less than two years. In the
      event the shares of Common Stock are not timely listed by the Listing Date,
      or
      if the listing is not continuously maintained for two years after the Listing
      Date (each a “ListingDefault”), then in addition to any other
      rights the Purchasers may have hereunder or under applicable law, on the first
      day of a Listing Default and on each monthly anniversary of each such Listing
      Default date (if the applicable Listing Default shall not have been cured by
      such date) until the applicable Listing Default is cured, the Company shall
      pay
      to each Purchaser an amount in cash, as partial liquidated damages and not
      as a
      penalty, equal to 1.5% of the aggregate purchase price paid by such Purchaser
      pursuant to this Agreement for any Debenture then held by such Purchaser. If
      the
      Company fails to pay any partial liquidated damages pursuant to this Section
      in
      full within seven days after the date payable, the Company will pay interest
      thereon at a rate of 18% per annum (or such lesser maximum amount that is
      permitted to be paid by applicable law) to the Purchaser, accruing daily from
      the date such partial liquidated damages are due until such amounts, plus all
      such interest thereon, are paid in full. The partial liquidated damages pursuant
      to the terms hereof shall apply on a daily pro-rata basis for any portion of
      a
      month prior to the cure of a Listing Default. 

     

    4.13
      Participation
      in Future Financing.
      

     

           
      (a) From the date hereof until the date that is the 24 month anniversary of
      the
      date hereof, upon any financing by the Company or any of its Subsidiaries of
      Common Stock or Common Stock Equivalents (a “Subsequent Financing”), each
      Purchaser shall have the right to participate in up to an amount of the
      Subsequent Financing equal to 100% of the Subsequent Financing (the
“Participation Maximum”). 

     

            
      (b) At least 5 Business Days prior to the closing of the Subsequent Financing,
      the Company shall deliver to each Purchaser a written notice of its intention
      to
      effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask
      such Purchaser if it wants to review the details of such financing (such
      additional notice, a “Subsequent Financing Notice”). Upon the request of
      a Purchaser, and only upon a request by such Purchaser, for a Subsequent
      Financing Notice, the Company shall promptly, but no later than 1 Business
      Day
      after such request, deliver a Subsequent Financing Notice to such Purchaser.
      The
      Subsequent Financing Notice shall describe in reasonable detail the proposed
      terms of such Subsequent Financing, the amount of proceeds intended to be raised
      thereunder, the Person with whom such Subsequent Financing is proposed to be
      effected, and attached to which shall be a term sheet or similar document
      relating thereto. 

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

       

    

            
      (c) Any Purchaser desiring to participate in such Subsequent Financing must
      provide written notice to the Company by not later than 5:30 p.m. (New York
      City
      time) on the 5th
      Business
      Day after all of the Purchasers have received the Pre-Notice that the Purchaser
      is willing to participate in the Subsequent Financing, the amount of the
      Purchaser’s participation, and that the Purchaser has such funds ready, willing,
      and available for investment on the terms set forth in the Subsequent Financing
      Notice. If the Company receives no notice from a Purchaser as of such
      5th
      Business
      Day, such Purchaser shall be deemed to have notified the Company that it does
      not elect to participate. 

     

            
      (d) If by 5:30 p.m. (New York City time) on the 5th
      Business
      Day after all of the Purchasers have received the Pre-Notice, notifications
      by
      the Purchasers of their willingness to participate in the Subsequent Financing
      (or to cause their designees to participate) is, in the aggregate, less than
      the
      total amount of the Subsequent Financing, then the Company may effect the
      remaining portion of such Subsequent Financing on the terms and to the Persons
      set forth in the Subsequent Financing Notice. 

    

            
      (e) If by 5:30 p.m. (New York City time) on the 5th
      Business
      Day after all of the Purchasers have received the Pre-Notice, the Company
      receives responses to a Subsequent Financing Notice from Purchasers seeking
      to
      purchase more than the aggregate amount of the Participation Maximum, each
      such
      Purchaser shall have the right to purchase the greater of (a) their Pro Rata
      Portion (as defined below) of the Participation Maximum and (b) the difference
      between the Participation Maximum and the aggregate amount of participation
      by
      all other Purchasers. “Pro Rata Portion” is the ratio of (x) the
      Subscription Amount of Securities purchased on the Closing Date by a Purchaser
      participating under this Section 4.13 and (y) the sum of the aggregate
      Subscription Amounts of Securities purchased on the Closing Date by all
      Purchasers participating under this Section 4.13. 

     

           
      (f) The Company must provide the Purchasers with a second Subsequent Financing
      Notice, and the Purchasers will again have the right of participation set forth
      above in this Section 4.13, if the Subsequent Financing subject to the initial
      Subsequent Financing Notice is not consummated for any reason on substantially
      the same terms as set forth in such Subsequent Financing Notice within 60
      Business Days after the date of the initial Subsequent Financing Notice.

     

    (g)
      Notwithstanding the foregoing, this Section 4.13 shall not apply in respect
      of
      an Exempt Issuance. 

     

           
      4.14 Subsequent
      Equity Sales.
      Except
      for the Qualified Offering, from the date hereof until such time as no Purchaser
      holds any of the Debentures, the Company shall be prohibited from effecting
      or
      entering into an agreement to effect any subsequent equity sale involving a
      “Variable Rate Transaction”. The term “Variable Rate Transaction” shall
      mean a transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon
and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock or
      (ii) enters into any agreement, including, but not limited to, an equity line
      of
      credit, whereby the Company may sell securities at a future determined price.
      

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

           
      4.15 Equal
      Treatment of Purchasers.
      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 the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. Further, the Company shall not make any payment of
      principal or interest on the Debentures in amounts which are disproportionate
      to
      the respective principal amounts outstanding on the Debentures at any applicable
      time. For clarification purposes, this provision constitutes a separate right
      granted to each Purchaser by the Company and negotiated separately by each
      Purchaser, and is intended to treat for the Company the Debenture holders as
      a
      class and shall not in any way be construed as the Purchasers acting in concert
      or as a group with respect to the purchase, disposition or voting of Securities
      or otherwise. 

    

         
4.16
Priority
      of Investment.
      The
      Company shall subordinate all outstanding loans and loans from shareholders
      and
      other beneficial owners of Common Stock and Common Stock Equivalents to the
      Debentures. 

     

            
      4.17 Reporting
      Requirements.
      Until
      the time the Company becomes subject to the reporting provisions of the Exchange
      Act, the Company shall furnish to each Purchaser that holds at least $100,000
      of
      shares of Common Stock (on an as converted basis) the following: 

     

            
      (a) As soon as available and in any event within ninety (90) days after the
      end
      of each fiscal year of the Company, audited financial statements of the Company
      as at the end of such fiscal year and related statements of income and expenses
      for such fiscal year, all in reasonable detail and in scope to the Purchaser,
      prepared in accordance with GAAP, with the opinion of an independent certified
      public accountant reasonably acceptable to the Purchaser as evidenced by the
      prior written consent of the Purchaser; 

     

            
      (b) As soon as available and in any event within forth-five (45) days after
      the
      end of the sixth (6th)
      month
      of the Company’s fiscal year, reviewed financial statements of the Company as at
      the end of such six month period and related statements of income and expenses
      for such period, all in reasonable detail and scope to Purchaser, prepared
      in
      accordance with GAAP, and prepared by an independent certified public accountant
      reasonably acceptable to the Purchaser as evidenced by the prior written consent
      of the Purchaser; 

     

            
      (c) As soon as available and in any event within thirty (30) days after the
      end
      of each fiscal quarter, quarterly financial statements prepared by the Company
      and other information reasonably requested by the Purchaser; 

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

            
      (d) As soon as available and in any event within fifteen (15) days after the
      end
      of each month, monthly reports containing information on the Company's sales
      and
      other information reasonably requested by the Purchaser; 

     

            
      (e) As soon as available and in any event not less than thirty (30) days prior
      to the commencement of each fiscal year, a detailed annual budget and strategic
      plan for the Company's business for such fiscal year, which shall have been
      approved by the Company's Board of Directors; 

     

        
          (f) As soon as possible and in any event within five (5) days
      after the Purchasers notify the Company of the occurrence of each Event of
      Default, a statement of an authorized officer of the Company setting forth
      the
      nature and period of existence of such Event of Default and the action which
      the
      Company has taken and proposes to take with respect thereto; 

     

            
      (g) Promptly after the sending or filing thereof, copies of all reports, if
      any,
      which the Company sends to any of its shareholders, and copies of all reports
      and registration statements, if any, which the Company files with the Commission
      or any Trading Market; 

     

            
      (h) Promptly after the filing or receiving thereof, copies of all reports and
      notices, if any, which the Company files under ERISA, with the Internal Revenue
      Service or the Pension Benefit Guaranty Corporation or the U.S. Department
      of
      Labor or which the Company receives from any of such Persons; 

    

     (i)
      Promptly upon determination of the need for the Company to obtain additional
      financing, all information concerning such determination if, as and when
      available; 

     

            
      (j) Information concerning offers or solicitations, and the terms and conditions
      thereof, for additional equity financing, given to the Purchaser not less than
      30 days prior to the entering into of such financial arrangement; and

     

     (k)
      Such other information respecting the condition or operations, financial or
      otherwise, of the Company as the Purchasers may from time to time reasonably
      request. 

     

           
      4.18 Accountants.
      The
      Company shall promptly give the Purchaser notice of any change in the firm
      of
      independent certified public accountants utilized by the Company, provided
      that
      any new firm shall be reasonably acceptable to the Purchasers. 

     

           
      4.19 Access
      to Records.
      Until
      the time the Company becomes subject to the reporting provisions of the Exchange
      Act (a “Reporting Company”), the Company shall provide each Purchaser
      that holds at least $100,000 of shares of Common Stock (on an as converted
      basis) and/or any of its duly authorized representatives, attorneys or
      accountants access to any and all records at the premises of the Company where
      such records are kept, such access being afforded without charge, but only
      upon
      reasonable request and during normal business hours. 

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

           
      4.20 Board
      of Directors.
      The
      Company shall have elected and in place a duly elected Board of Directors
      consisting of at least three directors from and after the Qualified Offering
      Closing Date, and until the Company becomes a Reporting Company, provide each
      Purchaser that holds at least $250,000 of Debentures with “observer” status and
      the right to attend all meetings of the Board of Directors of the Company and
      to
      obtain copies of all minutes from and notices regarding such meetings, as well
      as copies of all correspondence to members of the Board of Directors, subject
      to
      reasonable limitations in order to maintain the attorney-client privilege and
      confidentiality, including with respect to transactions involving such Purchaser
      and until the Company becomes a Reporting Company. If requested by the
      Purchasers, the Company will use its best efforts to cause one representative
      of
      the Purchasers to be elected to its Board of Directors. 

     

            
      4.21 Maintenance
      of Property.
      The
      Company shall keep all of its property, which is necessary or useful to the
      conduct of its business, in good working order and condition, ordinary wear
      and
      tear excepted. 

     

           
      4.22 Litigation.
      The
      Company shall promptly give the Purchasers notice in writing of all litigation
      and of all proceedings before any court, tribunal or Government Entity (as
      defined below) affecting the Company or any Subsidiary, except litigation
      proceedings which, if adversely determined, would not have a Material Adverse
      Effect. A “Government Entity” means the United States of America, any
      state, any political subdivision of a state and any agency or instrumentality
      of
      the United States of America or any state or political subdivision thereof
      and
      any entity exercising executive, legislative, judicial, regulatory or
      administrative functions of or pertaining to government. 

     

           
      4.23 Preservation
      of Corporate Existence.
      The
      Company shall preserve and maintain its corporate existence, rights, privileges
      and franchises in the jurisdiction of its incorporation, and qualify and remain
      qualified, as a foreign corporation in each jurisdiction in which such
      qualification is necessary in view of its business or operations and where
      the
      failure to qualify or remain qualified might reasonably have a Material Adverse
      Effect upon the financial condition, business or operations of the Company
      and
      its Subsidiaries taken as a whole. 

     

            
      4.24 Brokers.
      The
      Company agrees to indemnify the Purchasers against and hold the Purchasers
      harmless from any and all liabilities to any persons claiming brokerage
      commissions or similar fees other than the Broker on account of services
      purported to have been rendered on behalf of the Company in connection with
      this
      Agreement or the transactions contemplated hereby and arising out of the
      Company’s actions. The Company agrees that it will pay the Broker the fees set
      forth on Schedule 4.24 hereto. 

    

    ARTICLE
      V. 

    MISCELLANEOUS
      

     

           
      5.1 Termination.
      This
      Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations
      hereunder only and without any effect whatsoever on the obligations between the
      Company and the other Purchasers, by written notice to the other parties, if
      the
      Closing has not been consummated on or before April 30, 2006; provided,
however, that no such termination will affect the right of any party
      to
      sue for any breach by the other party (or parties). 

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

            
      5.2 Fees
      and Expenses.
      The
      Company shall deliver, prior to the Closing, a completed and executed copy
      of
      the Closing Statement, attached hereto as Annex A. Except as expressly
      set forth in the Transaction Documents to the contrary, each party shall pay
      the
      fees and expenses of its advisers, counsel, accountants and other experts,
      if
      any, and all other expenses incurred by such party incident to the negotiation,
      preparation, execution, delivery and performance of this Agreement. The Company
      shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
      in connection with the delivery of any Securities. 

     

            
      5.3 Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules. 

     

            
      5.4 Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m.
      (New
      York City time) on a Business Day, (b) the next Business Day after the date
      of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile number set forth on the signature pages attached hereto on a day
      that
      is not a Business Day or later than 5:30
      p.m.
      (New York City time) on any Business Day, (c) the second Business Day following
      the date of mailing, if sent by U.S. nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom such notice is required
      to be given. The address for such notices and communications shall be as set
      forth on the signature pages attached hereto. 

     

           
      5.5 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each
      Purchaser or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right. 

     

           
      5.6 Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. 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. 

     

            
      5.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Purchaser.
      Any Purchaser may assign any or all of its rights under this Agreement to any
      Person to whom such Purchaser assigns or transfers any Securities, provided
      such
      transferee agrees in writing to be bound, with respect to the transferred
      Securities, by the provisions hereof that apply to the “Purchasers”.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

            
      5.8 No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.11. 

     

           
      5.9 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of New York. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of New York, borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), 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 improper or inconvenient venue for such
      proceeding. 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 via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for 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. The parties hereby waive all rights to a trial by jury. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding. 

    

            
      5.10 Survival.
      The
      representations and warranties contained herein shall survive the Closing and
      the delivery, and/or Exchange of the Securities, as applicable for the
      applicable statue of limitations. 

     

           
      5.11 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together 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, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation
      of the party executing (or on whose behalf such signature is executed) with
      the
      same force and effect as if such facsimile signature page were an original
      thereof. 

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

           
      5.12 Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefore, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement. 

     

           
      5.13 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Purchaser
      exercises a right, election, demand or option under a Transaction Document
      and
      the Company does not timely perform its related obligations within the periods
      therein provided, then such Purchaser may rescind or withdraw, in its sole
      discretion from time to time upon written notice to the Company, any relevant
      notice, demand or election in whole or in part without prejudice to its future
      actions and rights. 

     

           
      5.14 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefore, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement Securities.
      

     

           
      5.15 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Purchasers and the Company
      will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be adequate.

    

            
      5.16 Payment Set Aside. To the extent that the Company makes a payment or
      payments to any Purchaser pursuant to any Transaction Document or a Purchaser
      enforces or exercises its rights thereunder, and such payment or payments or
      the
      proceeds of such enforcement or exercise or any part thereof are subsequently
      invalidated, declared to be fraudulent or preferential, set aside, recovered
      from, disgorged by or are required to be refunded, repaid or otherwise restored
      to the Company, a trustee, receiver or any other person under any law
      (including, without limitation, any bankruptcy law, state or federal law, common
      law or equitable cause of action), then to the extent of any such restoration
      the obligation or part thereof originally intended to be satisfied shall be
      revived and continued in full force and effect as if such payment had not been
      made or such enforcement or setoff had not occurred. 

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

            
      5.17 Usury.
      To the
      extent it may lawfully do so, the Company hereby agrees not to insist upon
      or
      plead or in any manner whatsoever claim, and will resist any and all efforts
      to
      be compelled to take the benefit or advantage of, usury laws wherever enacted,
      now or at any time hereafter in force, in connection with any claim, action
      or
      proceeding that may be brought by any Purchaser in order to enforce any right
      or
      remedy under any Transaction Document. Notwithstanding any provision to the
      contrary contained in any Transaction Document, it is expressly agreed and
      provided that the total liability of the Company under the Transaction Documents
      for payments in the nature of interest shall not exceed the maximum lawful
      rate
      authorized under applicable law (the “Maximum Rate”), and, without
      limiting the foregoing, in no event shall any rate of interest or default
      interest, or both of them, when aggregated with any other sums in the nature
      of
      interest that the Company may be obligated to pay under the Transaction
      Documents exceed such Maximum Rate. It is agreed that if the maximum contract
      rate of interest allowed by law and applicable to the Transaction Documents
      is
      increased or decreased by statute or any official governmental action subsequent
      to the date hereof, the new maximum contract rate of interest allowed by law
      will be the Maximum Rate applicable to the Transaction Documents from the
      Effectiveness Date forward, unless such application is precluded by applicable
      law. If under any circumstances whatsoever, interest in excess of the Maximum
      Rate is paid by the Company to any Purchaser with respect to indebtedness
      evidenced by the Transaction Documents, such excess shall be applied by such
      Purchaser to the unpaid principal balance of any such indebtedness or be
      refunded to the Company, the manner of handling such excess to be at such
      Purchaser’s election. 

     

           
      5.18 Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      Transaction Document, and no action taken by any Purchaser pursuant thereto,
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Purchaser shall be entitled to independently protect and enforce its rights,
      including without limitation the rights arising out of this Agreement or out
      of
      the other Transaction Documents, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose. Each Purchaser has been represented by its own separate legal counsel
      in their review and negotiation of the Transaction Documents. GM does not
      represent all of the Purchasers but only Alpha Capital Aktiengesellschaft.
      The
      Company has elected to provide all Purchasers with the same terms and
      Transaction Documents for the convenience of the Company and not because it
      was
      required or requested to do so by the Purchasers. 

    

           
      5.19 Liquidated
      Damages.
      The
      Company’s obligations to pay any partial liquidated damages or other amounts
      owing under the Transaction Documents is a continuing obligation of the Company
      and shall not terminate until all unpaid partial liquidated damages and other
      amounts have been paid notwithstanding the fact that the instrument or security
      pursuant to which such partial liquidated damages or other amounts are due
      and
      payable shall have been canceled. 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

       

    

           
      5.20 Construction. The parties agree that each of them and/or their
      respective counsel has reviewed and had an opportunity to revise the Transaction
      Documents and, therefore, the normal rule of construction to the effect that
      any
      ambiguities are to be resolved against the drafting party shall not be employed
      in the interpretation of the Transaction Documents or any amendments hereto.
      

    

    (Signature
      Pages Follow) 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above. 

     

    
      	MOBILIER
              INC.	 	 	
               Address for Notice:

            
	By:		 	 	70
              S. Lively Blvd.
              
	 	
              
                

              

              Name:
                Howard Leventhal 

              Title:
                Pres. 

            	 	 	
              Elk
                Grove Village, IL 60007

              Attn:
                Howard Leventhal

              Fax:
                (312) 896-9235

            

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK 

    SIGNATURE
      PAGE FOR
      PURCHASER FOLLOWS] 

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    [PURCHASER
      SIGNATURE PAGES TO  MOBILIER
      INC. 

    SECURITIES
      PURCHASE
      AGREEMENT] 

     

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above. 

     

    Name
      of
      Purchaser: ALPHA CAPITAL AKTIENGESELLSCHAFT 

    Signature
      of Authorized Signatory of Purchaser:__________________________________
      

    Name
      of
      Authorized Signatory: ____________________________________________________
      

    Title
      of
      Authorized Signatory: _____________________________________________________
      

    Email
      Address of Purchaser:________________________________________________
      

     

    Address
      for Notice of Purchaser: 

     

    Pradafant
      7 

    9490
      Furstentums 

    Vaduz,
      Lichtenstein 

    Fax:
      011-42-32323196 

     

    Address
      for Delivery of Securities for Purchaser (if not same as above): 

     

    Subscription
      Amount: $______________ 

     

    [SIGNATURE
      PAGES CONTINUE] 

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    [PURCHASER
      SIGNATURE PAGES TO MOBILIER
      INC. 

    SECURITIES PURCHASE
      AGREEMENT] 

     

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above. 

     

    Name
      of
      Purchaser: _________________________________________________________

    Signature
      of Authorized Signatory of Purchaser:
      __________________________________ 

    Name
      of
      Authorized Signatory: ____________________________________________________
      

    Title
      of
      Authorized Signatory: _____________________________________________________
      

    Email
      Address of Purchaser:________________________________________________

     

    Address
      for Notice of Purchaser: 

     

    Address
      for Delivery of Securities for Purchaser (if not same as above): 

     

    Subscription
      Amount: $_______________ 

     

    [SIGNATURE
      PAGES CONTINUE] 

    

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    Annex
      A 

     

    CLOSING
      STATEMENT 

     

    Pursuant
      to the attached Securities Purchase Agreement, dated as of the date hereof,
      the
      purchasers shall purchase up to $1,500,000 of Debentures from Mobilier Inc.,
      a
      Delaware corporation (the “Company”). Grushko & Mittman, P.C., as
      Escrow Agent, is hereby instructed to disburse the proceeds in accordance with
      this Closing Statement to the addresses or pursuant to the wire transfer
      instructions attached hereto. 

     

    Disbursement
      Date:
      April
      ____, 2006 

     

    
      	
              I.
                PURCHASE PRICE 

            
	
              Gross
                Proceeds 

            	 	
              $

            	
              1,000,000

            	 
	 	 	 	 	 
	
              II.
                DISBURSEMENTS*
                

            	 	 	 	 
	
              GM
                (Legal Fees) 

            	 	
              $

            	
              18,000

            	 
	
              Axiom
                Capital Management Inc. 

            	 	
              $

            	
            	 
	
              Alan
                W. Peryam, LLC 

            	 	
              $

            	
            	 
	
              Wollmuth
                Maher & Deutsch LLP 

            	 	
              $

            	
            	 
	
              Company
                

            	 	
              $

            	
            	 
	 	 	 	 	 
	
              Total
                Amount Disbursed: 

            	 	
              $

            	
              1,000,000

            	 

    

      

    
      
        *
          In the
          aggregate, these sums represent the entire Subscription Amount. 

         

        (1)
          Funds to be disbursed to the Company shall be delivered
          by wire transfer to: 

         

         

         

         

      
[COMPANY WIRE INSTRUCTIONS]

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    

    (2)
      Funds to be disbursed to Axiom Capital Management Inc. shall be delivered by
      wire transfer to: 

     

     

     

    (3)
      Funds to be disbursed to Alan W. Peryam, LLC shall be delivered by wire transfer
      to: 

     

     

     

    (4)
      Funds to be disbursed to GM shall be delivered by wire transfer to:

     

     

     

    Citibank,
      N.A. 

    ABA
      Number: 0210-00089 

    For
      Credit to: Grushko & Mittman, Operating Account 

    Account
      Number: 17347668

    

    (5)
      Funds to be disbursed to Wollmuth Maher & Deutsch LLP shall be delivered by
      wire transfer to: 

     

     

     

    The
      Company hereby authorizes the distribution of the proceeds as set forth in
      this
      Closing Statement. 

     

    MOBILIER
      INC. 

     

    
      	By:	 	 	 	 
	 	
              
                

              

              Name: 

              Title: 

            	 	 	
            
	 	 	 	 	 

    

     

    
      
        
        

      

      
        42Exhibit
      D 

     

    SECURITY
      AGREEMENT 

     

    1.      
      Identification.
      

     

     
      This Security Agreement (the “Agreement”), dated as of April ___, 2006, is
      entered into by and between Mobilier Inc., a Delaware corporation (“Parent”),
      the Subsidiaries of the Parent identified on Annex I hereto (each a “Guarantor”
and together with Parent, each a “Debtor” and collectively the “Debtors”), and
      Axiom Capital Management Inc., as collateral agent acting in the manner and
      to
      the extent described in the Collateral Agent Agreement defined below (the
“Collateral Agent”), for the benefit of the parties identified on Schedule A
      hereto (collectively, the “Lenders”). 

     

    2.     
      Recitals.
      

     

     
      2.1
      The
      Lenders have made, are making and will be making loans to Parent (the “Loans”).
      It is beneficial to each Debtor that the Loans were made and are being made.
      

     

      2.2
      The
      Loans are and will be evidenced by certain convertible debentures (each a
“Debenture”) issued by Parent on or about the date of and after the date of this
      Agreement pursuant to a securities purchase agreement (“Securities Purchase
      Agreement”) to which Parent and Lenders are parties. The Debentures are further
      identified on Schedule A hereto and were and will be executed by Parent as
      “Borrower” or “Debtor” for the benefit of each Lender as the “Holder” or
“Lender” thereof. Schedule A hereto may be amended to include such other Lenders
      who become parties hereto and sign this Agreement, the Collateral Agent
      Agreement and any other agreement reasonably requested by the Collateral Agent,
      who will have purchased Debentures pursuant to the Securities Purchase
      Agreement. 

     

      2.3
      In
      consideration of the Loans made and to be made by Lenders to Parent and for
      other good and valuable consideration, and as security for the performance
      by
      Parent of its obligations under the Debentures and as security for the repayment
      of the Loans and all other sums due from Debtors to Lenders arising under the
      Transaction Documents (as defined in the Securities Purchase Agreement), and
      any
      other agreement between or among them (collectively, the “Obligations”), each
      Debtor, for good and valuable consideration, receipt of which is acknowledged,
      has agreed to grant to the Collateral Agent, for the benefit of the Lenders,
      a
      security interest in the Collateral (as such term is hereinafter defined),
      on
      the terms and conditions hereinafter set forth. 

     

      2.4
      The
      Lenders have appointed Axiom Capital Management Inc. as Collateral Agent
      pursuant to that certain Collateral Agent Agreement dated at or about April
      ___,
      2006 (“Collateral Agent Agreement”), among the Lenders and Collateral Agent.

     

      2.5
      The
      following defined terms which are defined in the Uniform Commercial Code in
      effect in the State of New York on the date hereof are used herein as so
      defined: Accounts, Chattel Paper, Documents, Equipment, General Intangibles,
      Instruments, Inventory and Proceeds. 

     

    3.     
       Grant
      of General Security Interest in Collateral.
      

     

      
      3.1 As security for the Obligations of Debtors, each Debtor hereby grants the
      Collateral Agent, for the benefit of the Lenders, a security interest in the
      Collateral. 

     

      
      3.2 “Collateral” shall mean all of the following property of Debtors:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     
      (A) All now owned and hereafter acquired right, title and interest of Debtors
      in, to and in respect of all Accounts, Goods, real or personal property, all
      present and future books and records relating to the foregoing and all products
      and Proceeds of the foregoing, and as set forth below: 

     

     
      (i) All now owned and hereafter acquired right, title and interest of Debtors
      in, to and in respect of all: Accounts, interests in goods represented by
      Accounts, returned, reclaimed or repossessed goods with respect thereto and
      rights as an unpaid vendor; contract rights; Chattel Paper; investment property;
      General Intangibles (including but not limited to, tax and duty claims and
      refunds, registered and unregistered patents, trademarks, service marks,
      certificates, copyrights, trade names, applications for the foregoing, trade
      secrets, goodwill, processes, drawings, blueprints, customer lists, licenses,
      whether as licensor or licensee, choses in action and other claims, and existing
      and future leasehold interests in equipment, real estate and fixtures);
      Documents; Instruments; letters of credit, bankers’ acceptances or guaranties;
      cash moneys, deposits; securities, bank accounts, deposit accounts, credits
      and
      other property now or hereafter owned or held in any capacity by Debtors, as
      well as agreements or property securing or relating to any of the items referred
      to above; 

     

      (ii)
      Goods: All now owned and hereafter acquired right, title and interest of
      Debtors in, to and in respect of goods, including, but not limited to:

     

      (a)
      All
      Inventory, wherever located, whether now owned or hereafter acquired, of
      whatever kind, nature or description, including all raw materials,
      work-in-process, finished goods, and materials to be used or consumed in
      Debtors’ business; finished goods, timber cut or to be cut, oil, gas,
      hydrocarbons, and minerals extracted or to be extracted, and all names or marks
      affixed to or to be affixed thereto for purposes of selling same by the seller,
      manufacturer, lessor or licensor thereof and all Inventory which may be returned
      to any Debtor by its customers or repossessed by any Debtor and all of Debtors’
right, title and interest in and to the foregoing (including all of a Debtor’s
      rights as a seller of goods); 

     

      (b)
      All
      Equipment and fixtures, wherever located, whether now owned or hereafter
      acquired, including, without limitation, all machinery, furniture and fixtures,
      and any and all additions, substitutions, replacements (including spare parts),
      and accessions thereof and thereto (including, but not limited to Debtors’
rights to acquire any of the foregoing, whether by exercise of a purchase option
      or otherwise); 

     

    (iii)
       Property: All now owned and hereafter acquired right, title and
      interests of Debtors in, to and in respect of any other personal property in
      or
      upon which a Debtor has or may hereafter have a security interest, lien or
      right
      of setoff; 

     

      (iv)
      Books and Records: All present and future books and records relating to
      any of the above including, without limitation, all computer programs, printed
      output and computer readable data in the possession or control of the Debtors,
      any computer service bureau or other third party; and 

     

      (v)
      Products and Proceeds: All products and Proceeds of the foregoing in
      whatever form and wherever located, including, without limitation, all insurance
      proceeds and all claims against third parties for loss or destruction of or
      damage to any of the foregoing. 

     

      (B)
      All
      now owned and hereafter acquired right, title and interest of Debtors in, to
      and
      in respect of the following: 

     

      (i)
      the
      shares of stock, partnership interests, member interests or other equity
      interests at any time and from time to time acquired by Debtors of any and
      all
      entities now or hereafter existing, (such entities being hereinafter referred
      to
      collectively as the “Pledged Issuers” and individually as a “Pledged Issuer”),
      the certificates representing such shares, partnership interests, member
      interests or other interests, all options
      and other rights, contractual or otherwise, in respect thereof and all
      dividends, distributions, cash, instruments, investment property and other
      property from time to time received, receivable or otherwise distributed in
      respect of or in exchange for any or all of such shares, partnership interests,
      member interests or other interests; 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

      (ii)
      all
      additional shares of stock, partnership interests, member interests or other
      equity interests from time to time acquired by Debtors, of any Pledged Issuer,
      the certificates representing such additional shares, all options and other
      rights, contractual or otherwise, in respect thereof and all dividends,
      distributions, cash, instruments, investment property and other property from
      time to time received, receivable or otherwise distributed in respect of or
      in
      exchange for any or all of such additional shares, interests or equity; and
      

     

     
      (iii) all security entitlements of Debtors in, and all Proceeds of any and
      all
      of the foregoing in each case, whether now owned or hereafter acquired by a
      Debtor and howsoever its interest therein may arise or appear (whether by
      ownership, security interest, lien, claim or otherwise). 

     

     
      Notwithstanding anything to the contrary contained herein or any Transaction
      Document, Collateral shall not include any personal property which is, or at
      the
      time of a Debtor’s acquisition thereof shall be subject to a purchase money
      mortgage or other purchase money lien or security interest, but only to the
      extent of the initial dollar amount such purchase money mortgage or lien.

     

      3.3
      The
      Collateral Agent is hereby specifically authorized, after the Maturity Date
      (defined in the Debentures) accelerated or otherwise, or after an Event of
      Default (as defined herein) and the expiration of any applicable cure period,
      to
      transfer any Collateral into the name of the Collateral Agent and to take any
      and all action deemed advisable to the Collateral Agent to remove any transfer
      restrictions affecting the Collateral. 

     

    4.      
      Perfection
      of Security Interest.
      

     

      4.1
      Each
      Debtor shall prepare, execute and deliver to the Collateral Agent UCC-1
      Financing Statements. The Collateral Agent is instructed to prepare and file
      at
      each Debtor’s cost and expense, financing statements in such jurisdictions
      deemed advisable to the Collateral Agent, including but not limited to the
      State
      of Delaware. The Financing Statements are deemed to have been filed for the
      benefit of the Collateral Agent and Lenders identified on Schedule A hereto.
      

     

      4.2
      The
      Parent shall deliver to Collateral Agent promptly stock certificates
      representing all of the shares of outstanding capital stock of the Guarantor
      (the “Securities”). All such certificates shall be held by or on behalf of
      Collateral Agent pursuant hereto and shall be delivered in suitable form for
      transfer by delivery, or shall be accompanied by duly executed instruments
      of
      transfer or assignment or undated stock powers executed in blank, all in form
      and substance satisfactory to Collateral Agent. 

     

      4.3
      All
      other certificates and instruments constituting Collateral from time to time
      required to be pledged to Collateral Agent pursuant to the terms hereof (the
      “Additional Collateral”) shall be delivered to Collateral Agent promptly upon
      receipt thereof by or on behalf of Debtors. All such certificates and
      instruments shall be held by or on behalf of Collateral Agent pursuant hereto
      and shall be delivered in suitable form for transfer by delivery, or shall
      be
      accompanied by duly executed instruments of transfer or assignment or undated
      stock powers executed in blank, all in form and substance satisfactory to
      Collateral Agent. If any Collateral consists of uncertificated securities,
      unless the immediately following sentence is applicable thereto, Debtors shall
      cause Collateral Agent (or its custodian, nominee or other designee) to become
      the registered holder thereof, or cause each issuer of such securities to agree
      that it will comply with instructions originated by Collateral Agent with
      respect to such securities without further consent by Debtors. If any Collateral
      consists of security
      entitlements, Debtors shall transfer such security entitlements to Collateral
      Agent (or its custodian, nominee or other designee) or cause the applicable
      securities intermediary to agree that it will comply with entitlement orders
      by
      Collateral Agent without further consent by Debtors. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

      4.4
      Within five (5) days after the receipt by a Debtor of any Additional Collateral,
      a Pledge Amendment, duly executed by such Debtor, in substantially the form
      of
      Annex I hereto (a “Pledge Amendment”), shall be delivered to Collateral Agent in
      respect of the Additional Collateral to be pledged pursuant to this Agreement.
      Each Debtor hereby authorizes Collateral Agent to attach each Pledge Amendment
      to this Agreement and agrees that all certificates or instruments listed on
      any
      Pledge Amendment delivered to Collateral Agent shall for all purposes hereunder
      constitute Collateral. 

     

      4.5
      If
      Debtor shall receive, by virtue of Debtor being or having been an owner of
      any
      Collateral, any (i) stock certificate (including, without limitation, any
      certificate representing a stock dividend or distribution in connection with
      any
      increase or reduction of capital, reclassification, merger, consolidation,
      sale
      of assets, combination of shares, stock split, spin-off or split-off),
      promissory note or other instrument, (ii)
      option or right, whether as an addition to, substitution for, or in exchange
      for, any Collateral, or otherwise, (iii)
      dividends payable in cash (except such dividends permitted to be retained by
      Debtor pursuant to Section 5.1 hereof) or in securities or other property or
      (iv) dividends or other distributions in connection with a partial or total
      liquidation or dissolution or in connection with a reduction of capital, capital
      surplus or paid-in surplus, Debtor shall receive such stock certificate,
      promissory note, instrument, option, right, payment or distribution in trust
      for
      the benefit of Collateral Agent, shall segregate it from Debtor’s other property
      and shall deliver it forthwith to Collateral Agent, in the exact form received,
      with any necessary endorsement and/or appropriate stock powers duly executed
      in
      blank, to be held by Collateral Agent as Collateral and as further collateral
      security for the Obligations. 

     

    5.      
      Distribution.
      

     

      5.1
      So
      long as no Event of Default exists, Debtors shall be entitled to exercise all
      voting power and receive payments pertaining to any of the Collateral, provided
      such exercise is not contrary to the interests of the Lenders and does not
      impair the Collateral. 

     

      5.2.
      At
      any time an Event of Default exists or has occurred, all rights of Debtors,
      upon
      notice given by Collateral Agent, to exercise the voting power and receive
      payments, which it would otherwise be entitled to pursuant to Section 5.1,
      shall
      cease and all such rights shall thereupon become vested in Collateral Agent,
      which shall thereupon have the sole right to exercise such voting power and
      receive such payments. 

     

      5.3
      All
      dividends, distributions, interest and other payments which are received by
      Debtors contrary to the provisions of Section 5.2 shall be received in trust
      for
      the benefit of Collateral Agent as security and Collateral for payment of the
      Obligations, shall be segregated from other funds of Debtors, and shall be
      forthwith paid over to Collateral Agent as Collateral in the exact form received
      with any necessary endorsement and/or appropriate stock powers duly executed
      in
      blank, to be held by Collateral Agent as Collateral and as further collateral
      security for the Obligations. 

     

    6.      
      Further
      Action By Debtors; Covenants and Warranties.
      

     

      6.1
      Collateral Agent at all times shall have a perfected security interest in the
      Collateral, the Securities, and the Additional Collateral (the “Perfected
      Collateral”). Each Debtor has and will continue to have full title to the
      Collateral free from any liens, leases, encumbrances, judgments or other claims.
      Collateral Agent’s security interest in the Collateral constitutes and will
      continue to constitute a first, prior and indefeasible security interest in
      favor of Collateral Agent. Each Debtor will do all acts and things, and will
      execute and file all
      instruments (including, but not limited to, security agreements, financing
      statements, continuation statements, etc.) reasonably requested by Collateral
      Agent to establish, maintain and continue the perfected security interest of
      Collateral Agent in the Perfected Collateral, and will promptly on demand,
      pay
      all costs and expenses of filing and recording, including the costs of any
      searches reasonably deemed necessary by Collateral Agent from time to time
      to
      establish and determine the validity and the continuing priority of the security
      interest of Collateral Agent, and also pay all other claims and charges that,
      in
      the opinion of Collateral Agent, exercised in good faith, are reasonably likely
      to materially prejudice, imperil or otherwise affect the Collateral or
      Collateral Agent’s or Lenders’ security interests therein. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

      6.2
      Other
      than in the ordinary course of business, for fair value and in cash, and except
      for Collateral which is substituted by assets of identical or greater value
      (with the consent of the Collateral Agent) or which has become obsolete or
      is of
      inconsequential value, each Debtor will not sell, transfer, assign or pledge
      those items of Collateral (or allow any such items to be sold, transferred,
      assigned or pledged), without the prior written consent of Collateral Agent
      other than a transfer of the Collateral to a wholly-owned subsidiary or to
      another Debtor on prior notice to Collateral Agent, and provided the Collateral
      remains subject to the security interest herein described. Although Proceeds
      of
      Collateral are covered by this Agreement, this shall not be construed to mean
      that Collateral Agent consents to any sale of the Collateral, except as provided
      herein. Sales of Collateral in the ordinary course of business shall be free
      of
      the security interest of Lenders and Collateral Agent and Lenders and Collateral
      Agent shall promptly execute such documents (including without limitation
      releases and termination statements) as may be required by Debtors to evidence
      or effectuate the same. 

     

      6.3
      Each
      Debtor will, at all reasonable times during regular business hours and upon
      reasonable notice, allow Collateral Agent or its representatives free and
      complete access to the Collateral and all of such Debtor’s records which in any
      way relate to the Collateral, for such inspection and examination as Collateral
      Agent reasonably deems necessary. 

     

      6.4
      Each
      Debtor, at its sole cost and expense, will protect and defend this Security
      Agreement, all of the rights of Collateral Agent and Lenders hereunder, and
      the
      Collateral against the claims and demands of all other persons. 

     

      6.5
      Debtors will promptly notify Collateral Agent of any levy, distraint or other
      seizure by legal process or otherwise of any part of the Collateral, and of
      any
      threatened or filed claims or proceedings that are reasonably likely to affect
      or impair any of the rights of Collateral Agent under this Security Agreement
      in
      any material respect. 

     

      6.6
      Each
      Debtor, at its own expense, will obtain and maintain in force insurance policies
      covering losses or damage to those items of Collateral which constitute physical
      personal property, which insurance shall be of the types customarily insured
      against by companies in the same or similar business, similarly situated, in
      such amounts (with such deductible amounts) as is customary for such companies
      under the same or similar circumstances, similarly situated. Debtors shall
      make
      the Collateral Agent a loss payee thereon to the extent of its interest in
      the
      Collateral. Collateral Agent is hereby irrevocably (until the Obligations are
      paid in full) appointed each Debtor’s attorney-in-fact to endorse any check or
      draft that may be payable to such Debtor as proceeds of such insurance so that
      Collateral Agent may collect the proceeds payable for any loss under such
      insurance. The proceeds of such insurance, less any costs and expenses incurred
      or paid by Collateral Agent in the collection thereof, shall be applied either
      toward the cost of the repair or replacement of the items damaged or destroyed,
      or on account of any sums secured hereby, whether or not then due or payable.
      

     

      6.7
      Collateral Agent may, at its option, and without any obligation to do so, pay,
      perform and discharge any and all amounts, costs, expenses and liabilities
      herein agreed to be paid or performed by Debtor. Upon Debtor’s failure to do so,
      all amounts expended by Collateral Agent in so doing shall become part of the
      Obligations
      secured hereby, and shall be immediately due and payable by Debtor to Collateral
      Agent upon demand and shall bear interest at the lesser of 15% per annum or
      the
      highest legal amount from the dates of such expenditures until paid.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

      6.8
      Upon
      the request of Collateral Agent, Debtors will furnish to Collateral Agent within
      five (5) business days thereafter, or to any proposed assignee of this Security
      Agreement, a written statement in form reasonably satisfactory to Collateral
      Agent, duly acknowledged, certifying the amount of the principal and interest
      and any other sum then owing under the Obligations, whether to its knowledge
      any
      claims, offsets or defenses exist against the Obligations or against this
      Security Agreement, or any of the terms and provisions of any other agreement
      of
      Debtors securing the Obligations. In connection with any assignment by
      Collateral Agent of this Security Agreement, each Debtor hereby agrees to cause
      the insurance policies required hereby to be carried by such Debtor, if any,
      to
      be endorsed in form satisfactory to Collateral Agent or to such assignee, with
      loss payable clauses in favor of such assignee, and to cause such endorsements
      to be delivered to Collateral Agent within ten (10) calendar days after request
      therefor by Collateral Agent. 

     

      6.9
      Each
      Debtor will, at its own expense, make, execute, endorse, acknowledge, file
      and/or deliver to the Collateral Agent from time to time such vouchers,
      invoices, schedules, confirmatory assignments, conveyances, financing
      statements, transfer endorsements, powers of attorney, certificates, reports
      and
      other reasonable assurances or instruments and take further steps relating
      to
      the Collateral and other property or rights covered by the security interest
      hereby granted, as the Collateral Agent may reasonably require to perfect its
      security interest hereunder. 

    

      6.10
      Debtors represent and warrant that they are the true and lawful exclusive owners
      of the Collateral, free and clear of any liens and encumbrances. 

     

      6.11
      Each
      Debtor hereby agrees not to divest itself of any right under the Collateral
      except as permitted herein absent prior written approval of the Collateral
      Agent, except to a subsidiary organized and located in the United States on
      prior notice to Collateral Agent provided the Collateral remains subject to
      the
      security interest herein described. 

     

      6.12
      Each
      Debtor shall cause each Subsidiary of such Debtor in existence on the date
      hereof and each Subsidiary not in existence on the date hereof to execute and
      deliver to Collateral Agent promptly and in any event within 10 days after
      the
      formation, acquisition or change in status thereof (A) a guaranty guaranteeing
      the Obligations and (B) if requested by Collateral Agent, a security and pledge
      agreement substantially in the form of this Agreement together with (x)
      certificates evidencing all of the capital stock of each Subsidiary of and
      any
      entity owned by such Subsidiary, (y) undated stock powers executed in blank
      with
      signatures guaranteed, and (z) such opinion of counsel and such approving
      certificate of such Subsidiary as Collateral Agent may reasonably request in
      respect of complying with any legend on any such certificate or any other matter
      relating to such shares and (C) such other agreements, instruments, approvals,
      legal opinions or other documents reasonably requested by Collateral Agent
      in
      order to create, perfect, establish the first priority of or otherwise protect
      any lien purported to be covered by any such pledge and security agreement
      or
      otherwise to effect the intent that all property and assets of such Subsidiary
      shall become Collateral for the Obligations. For purposes of this Agreement,
      “Subsidiary” means, with respect to any entity at any date, any
      corporation, limited or general partnership, limited liability company, trust,
      estate, association, joint venture or other business entity) of which more
      than
      50% of (A) the outstanding capital stock having (in the absence of
      contingencies) ordinary voting power to elect a majority of the board of
      directors or other managing body of such entity, (B) in the case of a
      partnership or limited liability company, the interest in the capital or profits
      of such partnership or limited liability company or (C) in the case of a trust,
      estate, association, joint venture or other entity, the beneficial interest
      in
      such trust, estate, association or other entity business is, at the time of
      determination, owned
      or
      controlled directly or indirectly through one or more intermediaries, by such
      entity. Annex
      I annexed hereto contains a list of all Subsidiaries of the Debtors as of the
      date of this Agreement. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    7.    
       Power
      of Attorney.
      

     

     
At
      any time an Event of Default exists or has occurred, each Debtor hereby
      irrevocably constitutes and appoints the Collateral Agent as the true and lawful
      attorney of such Debtor, with full power of substitution, in the place and
      stead
      of such Debtor and in the name of such Debtor or otherwise, at any time or
      times, in the discretion of the Collateral Agent, to take any action and to
      execute any instrument or document which the Collateral Agent may deem necessary
      or advisable to accomplish the purposes of this Agreement. This power of
      attorney is coupled with an interest and is irrevocable until the Obligations
      are satisfied. 

     

    8.     
      Performance
      By The Collateral Agent.
      

     

      If
      a
      Debtor fails to perform any material covenant, agreement, duty or obligation
      of
      such Debtor under this Agreement, the Collateral Agent may, after any applicable
      cure period, at any time or times in its discretion, take action to effect
      performance of such obligation. All reasonable expenses of the Collateral Agent
      incurred in connection with the foregoing authorization shall be payable by
      Debtors as provided in Paragraph 12.1 hereof. No discretionary right, remedy
      or
      power granted to the Collateral Agent under any part of this Agreement shall
      be
      deemed to impose any obligation whatsoever on the Collateral Agent with respect
      thereto, such rights, remedies and powers being solely for the protection of
      the
      Collateral Agent. 

     

    9.     
      Event
      of Default.
      

     

      An
      event
      of default (“Event of Default”) shall be deemed to have occurred hereunder upon
      the occurrence of any event of default as defined and described in this
      Agreement, in the Debentures, the Securities Purchase Agreement, and any other
      agreement to which Debtor and a Lender are parties. Upon and after any Event
      of
      Default, after the applicable cure period, if any, any or all of the Obligations
      shall become immediately due and payable at the option of the Collateral Agent,
      for the benefit of the Lenders, and the Collateral Agent may dispose of
      Collateral as provided below. A default by Debtor of any of its material
      obligations pursuant to this Agreement and any of the Transaction Documents
      (as
      defined in the Securities Purchase Agreement) shall be an Event of Default
      hereunder and an “Event of Default” as defined in the Debentures, and Securities
      Purchase Agreement. 

     

    10.    
      Disposition
      of Collateral.
      

     

      Upon
      and after any Event of Default which is then continuing, 

     

      10.1
      The
      Collateral Agent may exercise its rights with respect to each and every
      component of the Collateral, without regard to the existence of any other
      security or source of payment for the Obligations. In addition to other rights
      and remedies provided for herein or otherwise available to it, the Collateral
      Agent shall have all of the rights and remedies of a lender on default under
      the
      Uniform Commercial Code then in effect in the State of New York. 

     

      10.2
      If
      any notice to Debtors of the sale or other disposition of Collateral is required
      by then applicable law, five business (5) days prior written notice (which
      Debtors agree is reasonable notice within the meaning of Section 9.612(a) of
      the
      Uniform Commercial Code) shall be given to Debtors of the time and place of
      any
      sale of Collateral which Debtors hereby agree may be by private sale. The rights
      granted in this Section are in addition to any and all rights available to
      Collateral Agent under the Uniform Commercial Code. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     10.3
      The
      Collateral Agent is authorized, at any such sale, if the Collateral Agent deems
      it advisable to do so, in order to comply with any applicable securities laws,
      to restrict the prospective bidders or purchasers to persons who will represent
      and agree, among other things, that they are purchasing the Collateral for
      their
      own account for investment, and not with a view to the distribution or resale
      thereof, or otherwise to restrict such sale in such other manner as the
      Collateral Agent deems advisable to ensure such compliance. Sales made subject
      to such restrictions shall be deemed to have been made in a commercially
      reasonable manner. 

     

      10.4
      All
      proceeds received by the Collateral Agent for the benefit of the Lenders in
      respect of any sale, collection or other enforcement or disposition of
      Collateral, shall be applied (after deduction of any amounts payable to the
      Collateral Agent pursuant to Paragraph 12.1 hereof) against the Obligations
      pro
      rata among the Lenders in proportion to their interests in the Obligations.
      Upon
      payment in full of all Obligations, Debtors shall be entitled to the return
      of
      all Collateral, including cash, which has not been used or applied toward the
      payment of Obligations or used or applied to any and all costs or expenses
      of
      the Collateral Agent incurred in connection with the liquidation of the
      Collateral (unless another person is legally entitled thereto). Any assignment
      of Collateral by the Collateral Agent to Debtors shall be without representation
      or warranty of any nature whatsoever and wholly without recourse. To the extent
      allowed by law, each Lender may purchase the Collateral and pay for such
      purchase by offsetting up to such Lender’s pro rata portion of the purchase
      price with sums owed to such Lender by Debtors arising under the Obligations
      or
      any other source. 

     

    11.    
      Waiver
      of Automatic Stay.
      Debtor
      acknowledges and agrees that should a proceeding under any bankruptcy or
      insolvency law be commenced by or against Debtor, or if any of the Collateral
      should become the subject of any bankruptcy or insolvency proceeding, then
      the
      Collateral Agent should be entitled to, among other relief to which the
      Collateral Agent or Lenders may be entitled under the Note, Securities Purchase
      Agreement and any other agreement to which the Debtor, Lenders or Collateral
      Agent are parties, (collectively “Loan Documents”) and/or applicable law, an
      order from the court granting immediate relief from the automatic stay pursuant
      to 11 U.S.C. Section 362 to permit the Collateral Agent to exercise all of
      its
      rights and remedies pursuant to the Loan Documents and/or applicable law. Debtor
      EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
      362. FURTHERMORE, Debtor EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11
      U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE
      OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
      INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE COLLATERAL
      AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
      APPLICABLE LAW. Debtor hereby consents to any motion for relief from stay which
      may be filed by the Collateral Agent in any bankruptcy or insolvency proceeding
      initiated by or against Debtor, and further agrees not to file any opposition
      to
      any motion for relief from stay filed by the Collateral Agent. Debtor
      represents, acknowledges and agrees that this provision is a specific and
      material aspect of this Agreement, and that the Collateral Agent would not
      agree
      to the terms of this Agreement if this waiver were not a part of this Agreement.
      Debtor further represents, acknowledges and agrees that this waiver is
      knowingly, intelligently and voluntarily made, that neither the Collateral
      Agent
      nor any person acting on behalf of the Collateral Agent has made any
      representations to induce this waiver, that Debtor has been represented (or
      has
      had the opportunity to be represented) in the signing of this Agreement and
      in
      the making of this waiver by independent legal counsel selected by Debtor and
      that Debtor has had the opportunity to discuss this waiver with counsel. Debtor
      further agrees that any bankruptcy or insolvency proceeding initiated by Debtor
      will only be brought in the Federal Court within the Southern District of New
      York. 

     

    12.    
      Miscellaneous.
      

     

     12.1
      Expenses.
      Debtors
      shall pay to the Collateral Agent, on demand, the amount of any and all
      reasonable expenses, including, without limitation, attorneys’ fees, legal
      expenses and brokers’ fees, which the Collateral Agent may incur in connection
      with (a) sale, collection or other enforcement or disposition of Collateral;
      (b) exercise or enforcement of any of the rights, remedies or powers of the
      Collateral Agent hereunder or with respect to any or all of the Obligations
      upon
      breach or threatened breach; or (c) failure by Debtors to perform and observe
      any agreements of Debtors contained herein which are performed by the Collateral
      Agent. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

      12.2
      Waivers,
      Amendment and Remedies.
      No
      course of dealing by the Collateral Agent and no failure by the Collateral
      Agent
      to exercise, or delay by the Collateral Agent in exercising, any right, remedy
      or power hereunder shall operate as a waiver thereof, and no single or partial
      exercise thereof shall preclude any other or further exercise thereof or the
      exercise of any other right, remedy or power of the Collateral Agent. No
      amendment, modification or waiver of any provision of this Agreement and no
      consent to any departure by Debtors therefrom, shall, in any event, be effective
      unless contained in a writing signed by the Collateral Agent, and then such
      waiver or consent shall be effective only in the specific instance and for
      the
      specific purpose for which given. The rights, remedies and powers of the
      Collateral Agent, not only hereunder, but also under any instruments and
      agreements evidencing or securing the Obligations and under applicable law
      are
      cumulative, and may be exercised by the Collateral Agent from time to time
      in
      such order as the Collateral Agent may elect. 

     

      12.3
      Notices.
      All
      notices or other communications given or made hereunder shall be in writing
      and
      shall be personally delivered or deemed delivered the first business day after
      being faxed (provided that a copy is delivered by first class mail) to the
      party
      to receive the same at its address set forth below or to such other address
      as
      either party shall hereafter give to the other by notice duly made under this
      Section: 

     

    
      	To Debtors:	 	
              Mobilier Inc. 

              70 S. Lively Blvd. 

              Elk Grove Village, IL 60007
                

              Attn: Howard Leventhal, CEO &
                President 

              Fax: (312) 896-9235

            
	 	 	 
	With a copy by telecopier
              only
              to:	 	
              Alan W. Peryam, LLC 

              1120 Lincoln Street, Suite 1000
                

              Denver, CO 80203 

              Fax: (303) 866-0999 

            
	 	 	 
	To Lenders: 	 	
              To the addresses and telecopier numbers set forth 

              on Schedule A 

            
	 	 	 
	To the Collateral Agent:
              	 	
              Axiom Capital Management Inc. 

              780 Third Avenue, 43rd Floor
                

              New York, NY 10017 

              Attn: Marcelo Martins 

              Fax: (212) 521-3888

            
	 	 	 
	With a copy by telecopier
              only to:
              	 	
              Grushko & Mittman, P.C. 

              551 Fifth Avenue, Suite 1601
                

              New York, New York 10176

              Fax: (212) 697-3575

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Any
      party
      may change its address by written notice in accordance with this paragraph.
      

     

      12.4
      Term;
      Binding Effect.
      This
      Agreement shall (a) remain in full force and effect until payment and
      satisfaction in full of all of the Obligations; (b) be binding upon each Debtor,
      and its successors and permitted assigns; and (c) inure to the benefit of the
      Collateral Agent, for the benefit of the Lenders and their respective successors
      and assigns. 

     

      12.5
      Captions.
      The
      captions of Paragraphs, Articles and Sections in this Agreement have been
      included for convenience of reference only, and shall not define or limit the
      provisions hereof and have no legal or other significance whatsoever.

     

      12.6
      Governing
      Law; Venue; Severability.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to conflicts of laws principles that would
      result in the application of the substantive laws of another jurisdiction,
      except to the extent that the perfection of the security interest granted hereby
      in respect of any item of Collateral may be governed by the law of another
      jurisdiction. Any legal action or proceeding against a Debtor with respect
      to
      this Agreement may be brought in the courts in the State of New York sitting
      in
      the City of New York, Borough of Manhattan, or of the United States for the
      Southern District of New York, and, by execution and delivery of this Agreement,
      each Debtor hereby irrevocably accepts for itself and in respect of its
      property, generally and unconditionally, the jurisdiction of the aforesaid
      courts. Each Debtor hereby irrevocably waives any objection which they may
      now
      or hereafter have to the laying of venue of any of the aforesaid actions or
      proceedings arising out of or in connection with this Agreement brought in
      the
      aforesaid courts and hereby further irrevocably waives and agrees not to plead
      or claim in any such court that any such action or proceeding brought in any
      such court has been brought in an inconvenient forum. If any provision of this
      Agreement, or the application thereof to any person or circumstance, is held
      invalid, such invalidity shall not affect any other provisions which can be
      given effect without the invalid provision or application, and to this end
      the
      provisions hereof shall be severable and the remaining, valid provisions shall
      remain of full force and effect. 

     

      12.7
      Entire
      Agreement.
      This
      Agreement contains the entire agreement of the parties and supersedes all other
      agreements and understandings, oral or written, with respect to the matters
      contained herein. 

     

      12.8
      Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by facsimile signature
      and delivered by facsimile transmission. 

     

    13.    
      Intercreditor
      Terms.
      As
      between the Lenders, any distribution under paragraph 10.4 shall be made
      proportionately based upon the remaining principal amount (plus accrued and
      unpaid interest) to each as to the total amount then owed to the Lenders as
      a
      whole. The rights of each Lender hereunder are pari passu to the rights of
      the
      other Lenders hereunder. Any recovery hereunder shall be shared ratably among
      the Lenders according to the then remaining principal amount owed to each (plus
      accrued and unpaid interest) as to the total amount then owed to the Lenders
      as
      a whole. 

     

    14.    
      Termination;
      Release.
      When
      the Obligations have been indefeasibly paid and performed in full or all
      outstanding Convertible Debentures have been exchanged for Exchange Debentures
      or converted to common stock pursuant to the terms of the Convertible Debentures
      and the Securities Purchase Agreement, this Agreement shall terminate, and
      the
      Collateral Agent, at the request and sole expense of the Debtors, will execute
      and deliver to the Debtors the proper instruments (including UCC termination
      statements) acknowledging the termination
      of the Security Agreement, and duly assign, transfer and deliver to the Debtors,
      without recourse, representation or warranty of any kind whatsoever, such of
      the
      Collateral, including, without limitation, Securities and any Additional
      Collateral, as may be in the possession of the Collateral Agent. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    15.   
       Collateral
      Agent.
      

     

      15.1
      Collateral
      Agent Powers.
      The
      powers conferred on the Collateral Agent hereunder are solely to protect its
      interest (on behalf of the Lenders) in the Collateral and shall not impose
      any
      duty on it to exercise any such powers. 

     

      15.2
      Reasonable
      Care.
      The
      Collateral Agent is required to exercise reasonable care in the custody and
      preservation of any Collateral in its possession; provided, however, that the
      Collateral Agent shall be deemed to have exercised reasonable care in the
      custody and preservation of any of the Collateral if it takes such action for
      that purposes as any owner thereof reasonably requests in writing at times
      other
      than upon the occurrence and during the continuance of any Event of Default,
      but
      failure of the Collateral Agent, to comply with any such request at any time
      shall not in itself be deemed a failure to exercise reasonable care.

    

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

    
      	“DEBTOR”	 	 	“THE
              COLLATERAL AGENT”
	
              MOBILIER
                INC.
                

              a
                Delaware corporation 

            	 	 	AXIOM
              CAPITAL
              MANAGEMENT, INC.
	
              

            	 	 	
            
	
              By:
                Howard Leventhal

              Its:
                Pres. 

            	 	 	
              
 

    

     

    APPROVED
      BY “LENDERS”: 

     

    
      	 	 	 
	
  	 
 	 
 
	
              
ALPHA
              CAPITAL AKTIENGESELLSCHAFT	  	
              
 
	 	
            
	 	 
	
              
 	
              
 

    

     

    
      This
        Security Agreement may be signed by facsimile signature and

      delivered
        by confirmed facsimile transmission. 

       

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A TO SECURITY AGREEMENT

    
      

        
          	
                  LENDER
                    

                	
                  PRINCIPAL
                    AMOUNT OF DEBENTURE 

                
	
                   

                	
                   

                
	
                  ALPHA
                    CAPITAL AKTIENGESELLSCHAFT 

                	
                   

                
	
                  Pradafant
                    7 

                	
                   

                
	
                  9490
                    Furstentums 

                	
                   

                
	
                  Vaduz,
                    Lichtenstein 

                	
                   

                
	
                  Fax:
                    011-42-32323196 

                	
                   

                
	
                   

                	
                   

                
	
                   

                	
                   

                
	
                   

                	
                   

                
	
                  TOTALS
                    

                	
                   

                

        

      

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    ANNEX
      I

     

    TO
      

     

    SECURITY
      AGREEMENT 

     

    PLEDGE
      AMENDMENT 

     

    This
      Pledge Amendment, dated _________ __ 200_, is delivered pursuant to Section
      4.3
      of the Security Agreement referred to below. The undersigned hereby agrees
      that
      this Pledge Amendment may be attached to the Security Agreement, dated April
      ___, 2006, as it may heretofore have been or hereafter may be amended, restated,
      supplemented or otherwise modified from time to time and that the securities
      or
      other instruments listed on this Pledge Amendment shall be hereby pledged and
      assigned to Collateral Agent and become part of the Collateral referred to
      in
      such Security Agreement and shall secure all of the Obligations referred to
      in
      such Security Agreement. 

    

      
        	
                NAME
                  OF ISSUER 

              	
                JURISDICTION
                  OF INCORPORATION 

              	
                PERCENT
                  OWNED BY PARENT 

              	
                NUMBER
                  OF SHARES 

              	
                CLASS
                  

              	
                CERTIFICATE
                  NUMBER(S) 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              	
                 

              

      

    

     

    
      	 	 	 
	 	MOBILIER
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            
	 	 

    

     

    
      
        
        

      

      
        14

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