Document:

EMPLOYMENT
          AGREEMENT

         

      

    

    This
      Agreement
      is made
      between BOND
      LABORATORIES,
      INC.,
      a Nevada
      corporation (“Employer”), and Scott D. Landow, an individual resident of the
      State of California (“Employee”).

    

    WITNESSETH:

    

    
      WHEREAS,
        Employer
        and Employee desire to set forth the terms of Employee’s employment by
        Employer;

    

     

    
      NOW,
        THEREFORE,
        in
        consideration of the premises and the mutual covenants and agreements herein
        set
        forth, the parties hereto agree as follows:

    

    

    1. EMPLOYMENT.
      Employer
      hereby engages and employs Employee and Employee accepts such employment with
      Employer, all on the terms set forth herein. Employee’s principal duties
      initially shall be to serve as President and CEO with general responsibilities
      to assist in strategic matters of Employer. During his or her employment
      hereunder, Employee shall devote his or her best efforts and attention on a
      semi
      full-time basis to the performance of the duties required of Employee and shall
      discharge his or her duties in accordance with the directions of the Board
      of
      Directors of Employer.

    

    2. CANCELLATION OF
      EXISTING
      CONTRACTS.
      Employer
      and Employee agree that any existing employment, noncompetition, confidentiality
      or change-in-control agreements will be cancelled upon the effectiveness of
      this
      Agreement.

    

    3. COMPENSATION.

     

    3.1 Cash
      Compensation.
      As
      partial compensation for his or her services hereunder, Employee:

    

    (a)
      shall
      receive an annual base salary of Ten Thousand and No/100 ($10,000.00) Dollars
      (U.S.), per month prorated for any partial year of employment and payable in
      equal installments in accordance with Employer’s then-current payroll practices
      and procedures and subject to all applicable taxes and
      withholdings;

    

    (b)
      shall
      receive reimbursement of ordinary and necessary travel and other expenses,
      subject to Employer’s standard policies (including any required approvals) and
      reimbursement for all cell phone and Internet access charges; 

    

    (c)
      shall
      be provided medical and dental coverage for Employee and his immediate family
      by
      Employer, either through an employee benefit plan or separate policy(s), with
      Employer paying one hundred (100%) percent of all premiums on such coverages,;
      and

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    

    (d)
      shall
      be eligible to participate in those (i) employee benefit plans, and (ii)
      incentive compensation and equity-related programs, maintained by Employer,
      the
      latter being contingent upon recommendation of the Chairman of the Board of
      Employer and approval by the Compensation Committee of Employer’s Board of
      Directors; provided,
      however,
      that any
      such incentive compensation plan shall provide that, upon mutual pre-determined
      performance goals being achieved, Employee shall receive an annual bonus in
      cash
      not less than fifty (50%) nor more than one hundred (100%) percent of Employee’s
      then-current annual salary.

    

    3.2 Equity
      Compensation. As
      additional compensation for his or her services hereunder,
      Employee:

    

    (a) Shall
      be
      granted on an annual basis non-qualified or incentive (as the parties may from
      time-to-time determine) options to purchase shares of the voting capital stock
      of Employer, in such amounts and at such exercise prices as may be determined
      from time-to-time by the Compensation Committee of Employer’s Board of
      Directors, and upon such terms as are set forth in the documentation to evidence
      such grant; provided,
      however,
      that
      Employer hereby agrees, and such documentation shall provide, that such options
      shall fully vest upon the sooner to occur of (i) the third anniversary of the
      date of grant, or (ii) a Change of Control (as that term is defined in Exhibit
      “B” attached hereto); and

     

    4. CONFIDENTIALITY.
      Employee
      shall not disclose to third parties or use for his or her own or others’ benefit
      any Proprietary Information of Employer or any of its subsidiaries of which
      he
      or she becomes informed during his or her employment, whether or not such
      information or material is developed by him, except as might be required to
      be
      disclosed or used by him in order to perform the duties of his or her
      employment. As used herein, the term “Proprietary Information” refers to any and
      all information of a confidential, proprietary or secret nature which is or
      may
      be either applicable to or related in any way to (a) the business, present
      or
      future, of Employer or any of its subsidiaries, including without limitation
      the
      business of Employer, (b) the research and development or investigations of
      Employer or any or its subsidiaries, or (c) the business of any customer of
      Employer or any of its subsidiaries, and shall include, but not be limited
      to,
      trade secrets, processes, formulas, data, algorithms, source codes, object
      codes, documentation, flow-charts, drawings, correspondence, know-how,
      improvements, inventions, techniques, concepts, technologies, programs, designs,
      personnel records, marketing plans and strategies, customer lists, pricing
      and
      bidding policies and practices, costing information, salaries, proposals to
      licensors or customers, any data, confidential information or property entrusted
      to Employer or any of its subsidiaries by any licensors or customers and
      confidential information concerning customers or employees of Employer or any
      of
      its subsidiaries. Employee shall remain under this obligation of confidentiality
      for a period expiring one (1) year after termination of his or her employment
      hereunder (or indefinitely in the case of trade secrets) unless and until he
      or
      she is expressly released from it in a writing signed by Employer or he or
      she
      learns with certainty that the information or material in question has become
      public knowledge.

    

    5. EMPLOYER’S
      RIGHTS TO
      CERTAIN
      DISCOVERIES,
      ETC.
      Employee
      shall disclose promptly to Employer any and all concepts, inventions,
      improvements, discoveries, developments, techniques, modifications, procedures,
      formulas, ideas, trade secrets, innovations, systems, programs, know-how or
      designs (collectively, the “Discoveries”) related to the business or activities
      of Employer that he or she conceives, develops or reduces to practice during
      the
      time that he or she is employed by Employer. Employee agrees that all his or
      her
      right, title and interest in such Discoveries shall belong to Employer, in
      confirmation of which he or she shall execute deeds of assignment of such right,
      title and interest to Employer, its nominees, successors or assigns, whenever
      requested, without demanding separate or additional compensation therefor.
      All
      of the foregoing shall be the subject of the same confidentiality, nonuse and
      nondisclosure requirements as are prescribed in Section 4 hereof. Any of the
      Discoveries related to the business of Employer that Employee may reduce to
      practice or apply for a copyright or patent on during the first six (6) months
      after termination of his or her employment hereunder shall be presumed to have
      been conceived by him during the time of such employment and as such shall
      belong to Employer, and the burden shall be upon Employee, if he or she contends
      it was not, to prove it was not by clear and convincing
      evidence.

    
      
        
        

      

      
        -2-

        
          

        

      

       

    

    

    6. ASSISTANCE IN
      PROTECTING
      DISCOVERIES,
      ETC.
      Employee
      shall assist Employer and its nominees, successors or assigns (at its or their
      request) in every proper way during and following the period of his or her
      employment (entirely at its or their expense) to obtain and maintain for its
      or
      their own benefit copyrights or patents in any and all countries for all
      Discoveries described in Section 5 hereof. Such assistance shall include, but
      not be limited to, the execution and delivery of all lawful papers and documents
      of every nature which relate to the securing and maintenance of such copyrights
      and patent rights, and the performance of all other lawful acts, such as the
      giving of testimony in any interference proceedings, infringement suits, or
      other litigation, as may be deemed necessary or advisable by Employer or its
      nominees, successors or assigns.

    

    7. DELIVERY OF
      DOCUMENTATION,
      ETC.
      Upon
      termination of his or her employment, Employee shall promptly deliver to
      Employer any and all software, documents, drawings, manuals, letters, notes,
      notebooks, reports, and copies thereof, and all other materials of a secret
      or
      confidential nature relating to Employer’s business or activities, or relating
      to Employer’s customers, vendors or other business associates, that are in his
      or her possession or under his or her control.

    

    8. COVENANTS
      NOT TO
      COMPETE
      WITH OR
      SOLICIT
      FROM EMPLOYER.
      Acknowledging that the covenants contained in this Section 8 are part of the
      consideration for, and are reasonable in light of the employment and
      compensation covenants of Employer contained in this Agreement, Employee hereby
      covenants and agrees with Employer that, during his or her employment with
      Employer and for a period expiring one (1) year after the date of termination
      of
      such employment, that:

    

    (a)
      During the period of such employment he or she will not directly or indirectly
      compete with Employer for the business of providing products or services of
      any
      type provided by Employer during the term of this Agreement and will not
      otherwise engage in Prohibited Competition (as such term is defined in Section
      8(b)), and after termination of such employment he or she will not directly
      or
      indirectly compete with Employer for the business of providing products or
      services (or derivative products or services) which were offered or provided
      by
      Employer within one (1) year prior to the termination of such employment within
      that geographical area shown on Exhibit “A” attached hereto and incorporated
      herein (the “Territory”) nor otherwise engage in Prohibited Competition. The
      Territory is hereby acknowledged by both Employer and Employee as comprising
      the
      primary territory served by Employer and the territory in which Employer has
      actively solicited customers as of the date hereof.

    
      
        
        

      

      
        -3-

        
          

        

      

       

    

    

    (b)
      “Prohibited Competition” shall consist of acting as consultant, advisor,
      independent contractor, officer, manager, employee, principal, agent, trustee
      of
      any corporation, partnership, association or agent or agency, or directly or
      indirectly owning more than one (1%) percent of the outstanding capital stock
      of
      any corporation, or being a member or employee of any partnership or any owner
      or employee of any other business, any of which conducts a business in
      competition with Employer or any of its subsidiaries for the duration of this
      noncompetition agreement as set forth herein. “Prohibited Competition” shall
      also include (in addition to the foregoing):

    

    (i)
      Accepting employment with a customer of Employer or Employer’s affiliates with
      the intent or purpose of transferring business performed by Employer or
      Employer’s affiliates to a department, division of affiliate of the
      customer;

    

    (ii)
      Requesting or advising any of the customers, suppliers or other business
      contacts of Employer or Employer’s affiliates to withdraw, curtail, cancel or
      not increase their business with Employer or Employer’s affiliates;
      or

    

    (iii)
      Causing or inducing, or attempting to cause or induce, either directly or
      indirectly, any employees, sales representatives, consultants or other personnel
      of Employer or Employer’s affiliates to terminate their relationships or
      employment or breach their agreements with Employer or Employer’s affiliates,
      whether for the purpose of accepting employment with Employee or any other
      person, firm, association or corporation with which Employee is associated,
      or
      otherwise, or hiring any employee of Employer or its affiliates within four
      (4)
      months of such person having left the employ of Employer or of such
      affiliate.

    

    9. INJUNCTIVE
      RELIEF.
      Employee
      recognizes that the breach of any of his or her obligations under Sections
      4, 5,
      6, 7 or 8 hereof will give rise to irreparable injury to Employer inadequately
      compensable in damages and that, accordingly, Employer shall be entitled to
      injunctive relief against the breach or threatened breach of the within
      undertaking, without the requirement of posting a bond, in addition to other
      remedies at law or in equity which may be available.

    

    10. TERM.
      The term
      of this Agreement shall begin on the effective date of this Agreement and shall
      terminate on the third anniversary hereof, unless sooner terminated by either
      party in the manner set forth below.
      Either
      Employer or Employee may terminate Employee’s employment at any time by giving
      thirty (30) days’ prior written notice to the other. In addition, Employer shall
      have the right at any time to terminate Employee’s employment immediately for
      cause. Any action by Employer to terminate Employee’s employment shall be deemed
“for cause” if:

    
      
        
        

      

      
        -4-

        
          

        

      

       

    

    

    (a)
      Employee is unable to perform the essential functions of his or her job, with
      or
      without reasonable accomodation, (i) as a result of the habitual use of alcohol
      or drugs; or (ii) failure to perform his or her duties after written notice
      of
      such failure;

    

    (b)
      Employee has disclosed any material secret or confidential information of
      Employer or any subsidiary thereof without the consent of Employer or has
      violated or disregarded any other material duties, obligations or expected
      conduct as an employee of Employer;

    

    (c)
      Employee has committed any act or omitted to take any action in bad faith and
      to
      the detriment of Employer or any affiliate thereof;

    

    (d)
      Employee has committed (i) any felony; or (ii) any misdemeanor or other illegal
      conduct involving dishonesty, fraud or other matters of moral turpitude;
      or

    

    (e)
      Employee has acted against, or failed or omitted to act in, the best interests
      of Employer or any affiliate thereof, as determined in good faith by the Board
      of Directors of Employer.

    

    Employee’s
      obligations under Sections 4, 5, 6, 7, 8 and 12
      hereof
      shall survive and continue in effect following any termination of
      employment.

    

    11. SEVERANCE.
      If
      Employer should terminate Employee’s employment for any reason other than for
      cause pursuant to the preceding Section 10, Employee shall be paid an amount
      equal to his or her then-current monthly salary multiplied by the number of
      months remaining under this agreement, which payment shall be considered
      additional consideration for the noncompetition agreements set out in Section
      8
      hereof. Employee shall also be paid all unpaid annual bonuses for the remaining
      years under this agreement, in cash, at one hundred (100%) of the employee’s
      then-current annual salary.

    

    12. LITIGATION
      ASSISTANCE.
      Employee
      shall, for a period of five (5) years after termination of his or her employment
      hereunder, at no cost to Employer, unless otherwise provided herein, diligently
      and fully cooperate with Employer, including testifying, answering
      interrogatories, being deposed, and generally providing information and fully
      cooperating with the defense or prosecution of any suit or cause of action
      brought by or defended by Employer based upon any facts relating to any contact
      or matter which originated during Employee’s employment by Employer. Employer
      agrees to provide reasonable travel expenses pursuant to its current business
      travel policy for Employee’s assistance and cooperation in all such actions or
      suits, if required. Any requests for time away from Employee’s work must be
      reasonably acceptable to Employee, and Employee shall be compensated on a per
      diem basis based on Employee’s annual salary on the day before termination of
      this Agreement.

    

    13. ASSIGNMENT.
      The
      rights and benefits of Employee under this Agreement, other than accrued and
      unpaid amounts due under Section 3 hereof, are personal to him and shall not
      be
      assignable. Discharge of Employee’s undertakings in Sections 4, 5, 6, 7 and 8
      hereof shall remain an obligation of Employee’s executors, administrators, or
      other legal representatives or assigns.

    
      
        
        

      

      
        -5-

        
          

        

      

       

    

    

    14.
      NOTICES.
      All
      notices, demands, requests, or other communications which may be or are required
      to be given, served, or sent by either party to the other party pursuant to
      this
      Agreement shall be in writing and shall be hand delivered (including delivery
      by
      courier so long as a receipt or confirmation of delivery is obtained), sent
      by
      Federal Express or other recognized overnight delivery service, mailed by
      first-class, registered or certified mail, return receipt requested, postage
      prepaid, or transmitted by facsimile transmission (followed by delivery of
      the
      original of such document), addressed as set forth below. Either party hereto
      may designate by notice, in the manner herein above provided, a new address
      to
      which any notice, demand, request or communication may thereafter be so given,
      served or sent. Each notice, demand, request or communication which shall be
      mailed, delivered, or transmitted in the manner described above shall be deemed
      sufficiently given, served, sent and received for all purposes at such time
      as
      it is delivered to the addressee (with the return receipt, the delivery receipt,
      the affidavit of messenger or (with respect to a facsimile transmission) the
      answer back being deemed conclusive evidence of such delivery) or at such time
      as delivery is refused by the addressee upon presentation.Any notice or other
      communications under this Agreement shall be in writing, signed by the party
      making the same, and shall be delivered personally or sent by certified or
      registered mail, postage prepaid, addressed as follows:

    

    If
      to
      Employee: 

    

    

    If
      to
      Employer:                 
Bond
      Laboratories, Inc.

    777
      S.
      Highway 101

    Suite
      215

    Solana
      Beach, California 92075

    Attention:
      Chief Executive Officer

    Facsimile:
      (858) 847-9090

     

    15. GOVERNING
      LAW.
      This
      Agreement shall be interpreted and enforced in accordance with the laws of
      the
      State of California.

    

    16. SEVERABILITY.
      The
      parties agree that construction of this Agreement shall be in favor of its
      reasonable nature, legality and enforceability, and that any construction
      causing unenforceability shall yield to a construction permitting
      enforceability. It is agreed that the noncompetition, nonsolicitation,
      nondisclosure and nonhiring covenants and provisions of this Agreement are
      severable, and that if any single covenant or provision or multiple covenants
      or
      provisions should be found unenforceable, the entire Agreement and remaining
      covenants and provisions shall not fail but shall be construed and enforceable
      without any severed covenant or provision in accordance with the tenor of this
      Agreement. The parties specifically agree that no covenant or provision of
      this
      Agreement shall be invalidated because of overbreadth insofar as the parties
      acknowledge the scope of the covenants and provisions contained herein to be
      reasonable and necessary for the protection of Employer and not unduly
      restrictive upon Employee. However, should a court or any other trier of fact
      or
      law determine not to enforce any covenant or provision of this Agreement as
      written due to overbreadth, then the parties agree that said covenant or
      provision shall be enforced to the extent reasonable, with the court or such
      trier to make any necessary revisions to said covenant or provision to permit
      its enforceability, whether said revisions be in time, territory, or scope
      of
      prohibited activities.

    
      
        
        

      

      
        -6-

        
          

        

      

       

    

    

    17.
      ENTIRE
      AGREEMENT.
      This
      Agreement contains the entire agreement of the parties hereto with respect
      to
      the subject matter contained herein. There are no restrictions, promises,
      covenants, or undertakings, other than those expressly set forth herein. This
      Agreement supersedes all prior agreements and understandings between the parties
      with respect to such subject matter. This Agreement may not be changed except
      by
      a writing executed by the parties.

    

    18. HEADINGS.
      The
      headings contained herein are for convenience of reference only and are not
      intended to define, limit, expand or describe the scope or intent of any
      provision of this Agreement.

    

    19. COUNTERPARTS.
      This
      Agreement may be executed in any number or counterparts, each of which shall
      be
      deemed a part of the same original.

     

    
      IN
        WITNESS
        WHEREOF,
        the
        undersigned have executed this Agreement under seal as of the day and year
        first
        above written.

    

     

    
      
        	
                EMPLOYER:

              	 	
                EMPLOYEE:

              
	 	 	 
	
                
                  BOND LABORATORIES,
                    INC.

                

              	 	 
	 	 	 
	 	 	 
	
                By:

              	 	 	
                 

              
	 	 	 	 
	
                Name:

              	 	 	 
	 	 	 	 
	
                Title:

              	 	 	 

      

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

       

    

     

    
      EXHIBIT
        “A”

    

    

    Restricted
      Territory

    

    The
      United States of America

    
      
        
        

      

      
        Page
          1 of
          1

        
          

        

      

       

    

    
      EXHIBIT
        “B”

    

    

    Change
      of Control

    

    For
      the
      purposes of this Agreement, a “Change of Control” shall mean a change in control
      of Employer of a nature that would be required to be reported (assuming such
      event has not been “previously reported”) in response to Item 1(a) of a Current
      Report on Form 8-K pursuant to Section 13 or 15(d) of the Exchange Act of 1934
      (the “Exchange Act”); provided that, without limitation, a Change in Control
      shall also be deemed to have occurred at such time as:

    

    (a) Any
      “person” within the meaning of Section 14(d) of the Exchange Act, other than
      Employer, a subsidiary, or any employee benefit plan(s) sponsored by Employer
      or
      any subsidiary thereof, is or has become the “beneficial owner,” as defined in
      Rule 13d-3 under the Exchange Act, directly or indirectly, of fifty percent
      (50%) or more of the combined voting power of the outstanding securities of
      Employer ordinarily having the right to vote at the election of directors;
      or

    

    (b) Individuals
      who constitute the Board immediately prior to any meeting of stockholders (the
      “Incumbent Board”) have ceased for any reason to constitute at least a majority
      thereof, provided that any person becoming a director whose election, or
      nomination for election by Employer’s stockholders, was approved by a vote of at
      least three-quarters (3/4) of the directors comprising the Incumbent Board
      (either by a specific vote or by approval of the proxy statement of Employer
      in
      which such person is named as a nominee for director without objection to such
      nomination) shall be, for purposes of this Agreement, considered as though
      such
      person were a member of the Incumbent Board; or

    

    (c) Upon
      approval by Employer’s stockholders of a reorganization, merger, share exchange
      or consolidation, other than one with respect to which those persons who were
      the beneficial owners, immediately prior to such reorganization, merger, share
      exchange or consolidation, of outstanding securities of Employer ordinarily
      having the right to vote in the election of directors own, immediately after
      such transaction, more than fifty percent (50%) of the outstanding securities
      of
      the resulting corporation ordinarily having the right to vote in the election
      of
      directors; or

    

    (d) Upon
      approval by Employer’s stockholders of a complete liquidation and dissolution of
      Employer or the sale or other disposition of all or substantially all of the
      assets of Employer other than to a subsidiary thereof.

    
      
        
        

      

      
        Page
          1 of
          1AMENDED
      AND RESTATED SECURITIES PURCHASE AGREEMENT

    

    THIS
      AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of August 25, 2006, by and among ECUITY,
      INC.,
      a Nevada
      corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    

    WHEREAS,
      on or
      about March 30, 2006, the parties hereto entered into a series of financing
      documents, including without limitation, that certain Securities Purchase
      Agreement and convertible debentures issued thereto, an Amended and Restated
      Security Agreement, the Investor Registration Rights Agreement and Irrevocable
      Transfer Agent Instructions; 

     

    WHEREAS,
      this
      Agreement shall supersede the Securities Purchase Agreement dated March 30,
      2006, to delete any reference to the Promissory Note issued by the Company
      to
      the Buyer dated June 24, 2004 (the “June
      24, 2004 Note”),
      which
      had been fully satisfied as of March 30, 2006 and to reflect terms set forth
      herein;

     

    WHEREAS,
      except
      as otherwise stated herein, all other documents entered into by the parties
      on
      March 30, 2006 shall remain in full force and effect;

     

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

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase One Hundred Seventy Two Thousand Five Hundred
      Dollars ($172,500) of secured convertible debentures, which shall be convertible
      into shares of the Company’s common stock, par value $0.001 (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      of
      which One Hundred Seventy Two Thousand Five Hundred Dollars ($172,500) was
      funded on or about March 30, 2006 (the “Closing”)
      for a
      total purchase price of up to One Hundred Seventy Two Thousand Five Hundred
      Dollars ($172,500), (the “Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription
      Amount”);
      

     

    WHEREAS,
      as
      March 30, 2006, the Buyer was the beneficial owner of the following instruments
      with respect to the Company (i) a Promissory Note dated June 4, 2004 in the
      original principal amount of $850,000 (the “June
      4, 2004 Note”),
      (ii)
      a Promissory Note dated March 14, 2005 in the original principal amount of
      $350,000 (the “March
      14, 2005 Note”),
      (iii)
      a Promissory Note dated May 11, 2005 in the original principal amount of
      $1,100,000 (the “May
      11, 2005 Note”),
      (iv)
      Equipment Leasing dated August 30, 2005 in the original principal amount of
      $600,000 (the “Equipment
      Lease”),
      and
      (v) a certain Promissory Note dated October 21, 2005 in the original principal
      amount of $86,500 issued by the Company to CSI Business Finance, Inc.
      (“CSI
      Business”),
      which
      was subsequently assigned by CSI Business to Buyer and consented to by the
      Company on or about February 10, 2006 (the “February
      2006 Note”)
      (the
      June 4, 2004 Note, the March 14, 2005 Note, the May 11, 2005 Note and the
      February 2006 Note shall collectively be referred to as the “Prior
      Notes”)
      (the
      Prior Notes and the Equipment Lease shall collectively be referred to as the
      “Prior
      Funding”);
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      on
      March 30, 2006, the Company issued to the Buyer a Convertible Debenture,
      consolidating the Prior Funding with updated interest; 

     

    WHEREAS,
      the
      amended and restated Convertible Debenture (the “Consolidated
      Debenture”)
      to be
      issued on date hereof is being re-issued to delete any references to the June
      24, 2004 Note and to consolidate the outstanding amounts of principal on the
      Prior Funding, plus accrued and unpaid interest as of March 30, 2006 ((i)
      $500,000 of outstanding principal on the June 4, 2004 Note and $141,134.70
      as
      and for accrued but unpaid interest through March 30, 2006, (ii) $350,000 of
      outstanding principal on the March 14, 2005 Note and $43,610.99 as and for
      accrued but unpaid interest through March 30, 2006, (iii) $1,100,000 of
      outstanding principal on the May 11, 2005 Note and $100,175.34 of accrued and
      unpaid interest through March 30, 2006, (iv) $569,078 of outstanding principal
      on the Equipment Lease and $23,909.95 of accrued but unpaid interest through
      March 30, 2006, and (v) $86,500 of outstanding principal on the February 2006
      Note and $6,782.55 as and for accrued but unpaid interest through March 30,
      2006) for the total principal of Two Million Nine Hundred Twenty One Thousand
      One Hundred Ninety Two Dollars ($2,921,192) (the Consolidated Debenture and
      the
      convertible debenture purchased at the Closing shall collectively be referred
      to
      as the “Convertible
      Debentures;”
      

     

    WHEREAS,
      on
      March 30, 2006, the parties hereto executed and delivered an Investor
      Registration Rights Agreement (the “Investor
      Registration Rights Agreement”)
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act and the rules and regulations promulgated there under,
      and applicable state securities laws; 

     

    WHEREAS,
      on
      March 30, 2006, the parties hereto executed and delivered an Irrevocable
      Transfer Agent Instructions (the “Irrevocable
      Transfer Agent Instructions”);

     

    WHEREAS,
      on
      March 30, 2006, the parties hereto executed and delivered an Amended and
      Restated Security Agreement (the “Security
      Agreement”)
      pursuant to which the Company has previously secured its obligations under
      the
      Prior Notes and agreed to provide the Buyer a security interest in Pledged
      Collateral (as this term is defined in the Security Agreement), and to secure
      the Company’s obligations under this Agreement, the Convertible Debenture, the
      Investor Registration Rights Agreement, or any other obligations of the Company
      to the Buyer;

     

    WHEREAS,
      on
      March 30, 2006, the parties hereto executed and delivered an Amended and
      Restated Subsidiary Security Agreement (the “Subsidiary
      Security Agreement”)
      pursuant to which the Company, Ecuity Advanced Communications, Inc. a
      wholly-owned subsidiary of the Company, has previously agreed to provide the
      Buyer a security interest in Pledged Property (as this term is defined in the
      Subsidiary Security Agreement) to secure the Company’s obligations under this
      Agreement, the Convertible Debenture, the Investor Registration Rights Agreement
      and the Irrevocable Transfer Agent Instructions or any other obligations of
      the
      Company to the Buyer;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Pledge and Escrow Agreement (the
“Pledge
      and Escrow Agreement”)
      pursuant to which the Pledgors has agreed to provide the Buyer a security
      interest in the Pledged Shares (as this term is defined in the Pledge and Escrow
      Agreement), which were previously pledged to the Buyer on August 29, 2005,
      to
      secure the Company’s obligations under this Agreement, the Transaction
      Documents, or any other obligations of the Company to the Buyer.

     

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

     

    1. PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

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

     

    (b) Closing
      Date.
      The
      Closing of the purchase and sale of the Convertible Debentures shall take place
      at 10:00 a.m. Eastern Standard Time on the fifth (5th)
      business day following the date hereof, subject to notification of satisfaction
      of the conditions to the Closing set forth herein and in Sections 6 and 7 below
      (or such later date as is mutually agreed to by the Company and the Buyer(s))
      (the “Closing
      Date”).
      The
      Closing shall occur on the respective Closing Date at the offices of Yorkville
      Advisors, LLC, 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07302
      (or
      such other place as is mutually agreed to by the Company and the Buyer(s)).
      

     

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

     

    2. BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

    Except
      as
      otherwise stated herein, as of August 25, 2006, each Buyer represents and
      warrants, severally and not jointly, that:

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (i) Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein,
      the
      Security Agreement, the Investor Registration Rights Agreement, and the
      Irrevocable Transfer Agent Agreement; (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the fiscal year ended June 30, 2005; (iv) the Company’s Form 10-QSB for the
      fiscal quarter ended March 31, 2005 and (v) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

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

     

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

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    Except
      as
      otherwise stated herein, as of March 30, 2006, the Company represents and
      warrants to each of the Buyers that, except as set forth in the SEC Documents
      (as defined herein) or in the Disclosure Schedule attached hereto as Exhibit
“A”
(the “Disclosure
      Schedule”):

     

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

     

    (b) Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform this Agreement, the Security Agreement, the Subsidiary Security
      Agreement, the Investor Registration Rights Agreement, the Irrevocable Transfer
      Agent Agreement, and any related agreements (collectively the “Transaction
      Documents”)
      and to
      issue the Convertible Debentures and the Conversion Shares in accordance with
      the terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, have been duly authorized by the Company’s
      Board of Directors and no further consent or authorization is required by the
      Company, its Board of Directors or its stockholders, (iii) the Transaction
      Documents have been duly executed and delivered by the Company, (iv) the
      Transaction Documents constitute the valid and binding obligations of the
      Company enforceable against the Company in accordance with their terms, except
      as such enforceability may be limited by general principles of equity or
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      or
      similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies. The authorized officer of the Company executing the
      Transaction Documents knows of no reason why the Company cannot file the
      registration statement as required under the Investor Registration Rights
      Agreement or perform any of the Company’s other obligations under such
      documents. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) Capitalization.
      As of
      March 30, 2006, the authorized capital stock of the Company consists of
      400,000,000 shares of Common Stock and zero shares of Preferred Stock
      (“Preferred
      Stock”),
      of
      which 271,413,944 shares of Common Stock and zero shares of Preferred Stock
      are
      issued and outstanding. All of such outstanding shares have been validly issued
      and are fully paid and nonassessable. Except as disclosed in the SEC Documents
      (as defined in Section 3(f)), no shares of Common Stock are subject to
      preemptive rights or any other similar rights or any liens or encumbrances
      suffered or permitted by the Company. Except as disclosed in the SEC Documents
      or the Disclosure Schedule, as of the date of this Agreement, (i) there are
      no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its subsidiaries
      or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      any
      shares of capital stock of the Company or any of its subsidiaries, (ii) there
      are no outstanding debt securities and (iii) there are no agreements or
      arrangements under which the Company or any of its subsidiaries is obligated
      to
      register the sale of any of their securities under the Securities Act (except
      pursuant to the Registration Rights Agreement) and (iv) there are no outstanding
      registration statements and there are no outstanding comment letters from the
      SEC or any other regulatory agency. There are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Convertible Debentures as described in this Agreement. The
      Company has furnished to the Buyer true and correct copies of the Company’s
      Articles of Incorporation, as amended and as in effect on the date hereof (the
      “Articles
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    (f) SEC
      Documents: Financial Statements.
      Except
      for the most recent Form 10-QSB, which was filed on March 24, 2006, since
      January 1, 2003, the Company has filed all reports, schedules, forms, statements
      and other documents required to be filed by it with the SEC under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”)
      (all
      of the foregoing filed prior to the date hereof or amended after the date hereof
      and all exhibits included therein and financial statements and schedules thereto
      and documents incorporated by reference therein, being hereinafter referred
      to
      as the “SEC
      Documents”).
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at http://www.sec.gov true and complete copies of the
      SEC Documents. As of their respective dates, the financial statements of the
      Company disclosed in the SEC Documents (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. Such financial statements have been prepared in accordance with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such Financial
      Statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyer which is not
      included in the SEC Documents, including, without limitation, information
      referred to in this Agreement, contains any untrue statement of a material
      fact
      or omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (p) [Intentionally
      Omitted].
      

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    4. COVENANTS.

     

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

     

    
      
        
        

      

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

     

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

     

    (d) Reservation
      of Shares.
      The
      Company shall take all action reasonably necessary to at all times have
      authorized, and reserved for the purpose of issuance, such number of shares
      of
      Common Stock as shall be necessary to effect the issuance of the Conversion
      Shares. If at any time the Company does not have available such shares of Common
      Stock as shall from time to time be sufficient to effect the conversion of
      all
      of the Conversion Shares, the Company shall call and hold a special meeting
      of
      the shareholders within thirty (30) days of such occurrence, for the sole
      purpose of increasing the number of shares authorized. The Company’s management
      shall recommend to the shareholders to vote in favor of increasing the number
      of
      shares of Common Stock authorized. Management shall also vote all of its shares
      in favor of increasing the number of authorized shares of Common
      Stock.

     

    (e) Listings
      or Quotation.
      The
      Company shall promptly secure the listing or quotation of the Conversion Shares
      upon each national securities exchange, automated quotation system or The
      National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
      Board (“OTCBB”)
      or
      other market, if any, upon which shares of Common Stock are then listed or
      quoted (subject to official notice of issuance) and shall use its best efforts
      to maintain, so long as any other shares of Common Stock shall be so listed,
      such listing of all Conversion Shares from time to time issuable under the
      terms
      of this Agreement. The Company shall maintain the Common Stock’s authorization
      for quotation on the OTCBB.

     

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

     

    
      
        
        

      

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

     

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

     

    (i) Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, without
      the prior written consent of the Buyer(s), (i) issue or sell shares of Common
      Stock or Preferred Stock with or without consideration, (ii) issue any preferred
      stock, warrant, option, right, contract, call, or other security or instrument
      granting the holder thereof the right to acquire Common Stock with or without
      consideration, (iii) enter into any security instrument granting the holder
      a
      security interest in any and all assets of the Company, or (iv) file any
      registration statement on Form S-8.
      Notwithstanding the foregoing, the above restriction shall not apply to the
      following: (1) Tim Connolly (as set forth in the Disclosure Schedule); (2)
      2,000,000 shares of Common Stock to Weyerhaeuser Company as set forth in the
      Disclosure Schedule; (3) the preferred stock to Fox Communications as set forth
      in the Disclosure Schedule; and (4) Paul Hess up to the amounts of Common Stock
      set forth in the Disclosure Schedule. In addition, notwithstanding the
      foregoing, the Company shall be permitted to make issuances of its securities
      (the “Permitted
      Securities”)
      in
      accordance with those issuances set forth on Schedule 4(k) hereof. While any
      portion of the Convertible Debentures are outstanding the Permitted Securities
      shall have the following restrictions upon any sale, disposition and or transfer
      of such securities:
      (A)
Prior
      to
      the date that the Registration Statement is declared effective by the SEC,
      the
      Company and the holders of any of the Permitted Securities are restricted from
      selling, transferring or disposing of any portion of the Permitted Securities;
      and (B) for a period of one year following the effectiveness of the Registration
      Statement, any holder of the Permitted Securities may sell such securities
      in an
      amount equal to a maximum of 1% per quarter of the Company’s outstanding shares
      of Common Stock at the time of such sale. After one year following the date
      on
      which the Registration Statement has been declared effective the holders of
      the
      Permitted Securities may sell any portion of the Permitted Securities subject
      only to the restrictions of state and federal securities laws and the laws
      of
      their respective jurisdictions. The Company hereby covenants that any
      certificate representing any portion of the Permitted Securities that is issued
      prior to the date hereof shall bear a legend consistent with the restrictions
      contained in this Section 4(k). 

     

    
      
        
        

      

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

     

    (k) Rights
      of First Refusal.
      So
      long
      as any portion of Convertible Debentures are outstanding, if the Company intends
      to raise additional capital by the issuance or sale of capital stock of the
      Company, including without limitation shares of any class of common stock,
      any
      class of preferred stock, options, warrants or any other securities convertible
      or exercisable into shares of common stock (whether the offering is conducted
      by
      the Company, underwriter, placement agent or any third party) the Company shall
      be obligated to offer to the Buyers such issuance or sale of capital stock,
      by
      providing in writing the principal amount of capital it intends to raise and
      outline of the material terms of such capital raise, prior to the offering
      such
      issuance or sale of capital stock  to any third parties including, but not
      limited to, current or former officers or directors, current or former
      shareholders and/or investors of the obligor, underwriters, brokers, agents
      or
      other third parties.  The Buyers shall have five (5) business days from
      receipt of such notice of the sale or issuance of capital stock to accept or
      reject all or a portion of such capital-raising offer. 

     

    (l) Increase
      in Authorized Common Stock.
      The
      Company shall file a Preliminary Proxy Statement on Schedule 14A or Schedule
      14C
      with the SEC by October 20, 2006 increasing the Company’s authorized common
      stock to no less than Five Billion (5,000,000,000) shares of Common Stock to
      be
      issued upon conversion of the Convertible Debentures. The Company shall have
      effected the increase in authorized Common Stock by November 30, 2006. It shall
      be an event of default hereunder if the Company fails to strictly comply with
      this provision.

     

    (m) 
      The
      parties hereto acknowledge that the Buyer is the owner of the NOC/Switch (the
      “Switch”).
      The
      parties further agree that Company, or its assignees, shall be entitled to
      make
      a prepayment to the Buyer in the amount of Two Million Dollars ($2,000,000)
      to
      purchase the Switch. 

     

    
      
        
        

      

      
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    5. TRANSFER
      AGENT INSTRUCTIONS.

     

    (a) On
      March
      30, 2006, the Company issued the Irrevocable Transfer Agent Instructions to
      its
      transfer agent irrevocably appointing David Gonzalez, Esq. as the Company’s
      agent for purpose of having certificates issued, registered in the name of
      the
      Buyer(s) or its respective nominee(s), for the Conversion Shares representing
      such amounts of Convertible Debentures as specified from time to time by the
      Buyer(s) to the Company upon conversion of the Convertible Debentures, for
      interest owed pursuant to the Convertible Debenture, and for any and all
      Liquidated Damages (as this term is defined in the Investor Registration Rights
      Agreement). David Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars
      ($50)
      for every occasion they act pursuant to the Irrevocable Transfer Agent
      Instructions. The Company shall not change its transfer agent without the
      express written consent of the Buyer(s), which may be withheld by the Buyer(s)
      in its sole discretion. Prior to registration of the Conversion Shares under
      the
      Securities Act, all such certificates shall bear the restrictive legend
      specified in Section 2(g) of this Agreement. The Company warrants that no
      instruction other than the Irrevocable Transfer Agent Instructions referred
      to
      in this Section 5, and stop transfer instructions to give effect to Section
      2(g)
      hereof (in the case of the Conversion Shares prior to registration of such
      shares under the Securities Act) will be given by the Company to its transfer
      agent and that the Conversion Shares shall otherwise be freely transferable
      on
      the books and records of the Company as and to the extent provided in this
      Agreement and the Investor Registration Rights Agreement. Nothing in this
      Section 5 shall affect in any way the Buyer’s obligations and agreement to
      comply with all applicable securities laws upon resale of Conversion Shares.
      If
      the Buyer(s) provides the Company with an opinion of counsel, in form, scope
      and
      substance customary for opinions of counsel in comparable transactions to the
      effect that registration of a resale by the Buyer(s) of any of the Conversion
      Shares is not required under the Securities Act, the Company shall within two
      (2) business days instruct its transfer agent to issue one or more certificates
      in such name and in such denominations as specified by the Buyer. The Company
      acknowledges that a breach by it of its obligations hereunder will cause
      irreparable harm to the Buyer by vitiating the intent and purpose of the
      transaction contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Section 5 will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Section 5, that the Buyer(s) shall be
      entitled, in addition to all other available remedies, to an injunction
      restraining any breach and requiring immediate issuance and transfer, without
      the necessity of showing economic loss and without any bond or other security
      being required.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (viii) Upon
      completion of the increase in the number of authorized shares of Common Stock
      as
      set forth in Section 4(n), the Company shall have reserved out of its authorized
      and unissued Common Stock, solely for the purpose of effecting the conversion
      of
      the Convertible Debentures, shares of Common Stock to effect the conversion
      of
      all of the Conversion Shares then outstanding. 

     

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

     

    8. INDEMNIFICATION.

     

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

     

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

     

    
      
        
        

      

      
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    9. GOVERNING
      LAW: MISCELLANEOUS.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              If
                to the Company, to:

            	 	
              Ecuity,
                Inc.

            
	 	 	
              800
                Bellevue Way, Suite 600

            
	 	 	
              Bellevue,
                WA 98004

            
	 	 	
              Attn:
                King Cole, President 

            
	 	 	
              Telephone:
                (206) 210-5022

            
	 	 	
              Facsimile: (206)
                202-5022

            
	 	 	 
	
              With
                a copy to:

            	 	
              Kirkpatrick
                & Lockhart Nicholson Graham, LLP

            
	 	 	
              201
                South Biscayne Boulevard, Suite 2000

            
	 	 	
              Miami,
                Florida 33131

            
	 	 	
              Attention: Clayton
                E. Parker, Esq.

            
	 	 	
              Telephone: (305)
                539-3306

            
	 	 	
              Facsimile: (305)
                328-7095

            
	 	 	 

    

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        20

        
          

        

      

       

    

    

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

     

    
      	 	 	 
	 	
              COMPANY:

               

              
                ECUITY,
                  INC. 

              

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name: Shane
                Smith

            
	 	
              Title: CEO

            

    

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    DISCLOSURE
      SCHEDULE

     

    SCHEDULE
      2(f)

     

    The
      following is a list of shareholders with registration rights:

     

    1) Dr.
      John
      Todd: 6,666,667 shares of common stock

     

    2) Drew
      Connolly: 3,000,000 shares of common stock

    

    3) Weyerhaeuser
      Company: 2,000,000 shares of common stock

    

    4) See
      Schedule 3(c) for shares to be issued to Fox Communications with
      anticipated registration rights attached

    

    5) See
      Schedule 3(c) for shares to be issued to Tim Connolly with anticipated
      registration rights attached

    

    6) Paul
      Hess: up to $37,500 of shares of common stock 

     

    SCHEDULE
      3(c)

    

    The
      following is a list of securities that are to be issued and outstanding pursuant
      to agreements with the Company but have not yet been disclosed in the SEC
      Documents:

    

    1)
      $250,000 of common stock is to be issued to Tim Connolly, which shall be filed
      under an S-8 registration statement following the execution of this
      Agreement.

    

    2)
      Shares
      of preferred stock to be issued to Fox Communications for the release of debts
      currently owed to Fox Communications

    

    3)
      Shares
      of common stock to be issued to Digitaria Communications Networks for a loan
      in
      the amount of $150,000. The loan is contemplated by the Company but has not
      yet
      been documented.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      3(t)

    

    The
      following is a list of taxes that have not been paid by the
      Company:

     

    1) The
      Company owes $40,000 in state taxes as of December 2005. 

     

    2) 
      The
      Company owes $100,000 in municipal taxes which has accumulated over the past
      three years 

     

    SCHEDULE
      4(h)

    

    1) The
      Company has agreed to sell its Legacy Long Distance business and its 800
      Business Unit to Fox Communications in return for the release of $800,000 in
      debt. 

     

    2)
       Fox
      Communications will receive preferred shares with registration rights in an
      amount equivalent to $1.5M. They have the right to convert at the current share
      price, or the share price the day following the authorization for the new shares
      or the day after the reverse stock split is effected. The price will not be
      less
      than par which is .001.

     

    3) A
      reverse
      stock split will be determined at the shareholder meeting to be held prior
      to
      June 30, 2006. The reverse will be anticipated to achieve a share price between
      25 cents and 50 cents.

     

    4)
       The
      Company will consummate a merger with Digitaria Communication Networks, LLC
      (or
      a subsidiary of Digitaria) resulting in a change of control so that Digitaria
      Communication Networks, LLC will have controlling interest in the
      Company.

     

    SCHEDULE
      4(i)

     

    See
      Schedule 4(h)

    

    In
      addition, the board of directors has approved the reserving of 50 million shares
      of common stock for the issuance of options
      to
      employees, officers and directors under employee benefit plans.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      4(k)

    

    1)
       Shares
      of
      common stock to be issued to Digitaria Communications Networks for a loan in
      the
      amount of $150,000. The loan is contemplated by the Company but has not yet
      been
      documented

    

    2) 50
      million shares of common stock for the issuance of options
      to
      employees, officers and directors under employee benefit plans.

    

    3) Shane
      Smith and King Cole Promissory Note April 28, 2005 8,285,938  (conversion
      rights)

    

    4) King
      Cole, Shane Smith, and Jerry Schwartz Promissory Notes 2,117,500  (conversion
      rights)         

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS 

    

    
      	
              Name

            	 	
              Signature

            	 	
              Address/Facsimile
                

              Number
                of Buyer

            	 	
              Amount
                of Subscription

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
              Cornell
                Capital Partners, LP 

            	 	
              By: Yorkville
                Advisors, LLC

            	 	
              101
                Hudson Street - Suite 3700

            	 	
              $172,500

            
	 	 	
              Its: General
                Partner

            	 	
              Jersey
                City, NJ 07303

            	 	 
	 	 	 	 	
              Facsimile:
                (201) 985-8266

            	 	 
	 	 	 	 	 	 	 
	 	 	
              By:
                _____________   

            	 	 	 	 
	 	 	
              Name: Mark
                Angelo

            	 	 	 	 
	 	 	
              Its: Portfolio
                Manager

            	 	 	 	 
	 	 	 	 	 	 	 
	
              With
                a copy to: 

            	 	
              Troy
                Rillo, Esq.

            	 	
              101
                Hudson Street - Suite 3700

            	 	 
	 	 	 	 	
              Jersey
                City, NJ 07302

            	 	 
	 	 	 	 	
              Facsimile:
                (201) 985-8266

            	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

    

     

    
      
        
        

      

      
        4

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