Document:

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EXHIBIT 10.18

                             SUBCONTRACTOR AGREEMENT

       This subcontractor agreement (the "Agreement"), is made to be effective
on May 1, 2003 (the "Effective Date") by and between EDT Learning, Inc. ("EDT
Learning"), a Delaware corporation and Interactive Alchemy, Inc. ("Contractor").

       WHEREAS, EDT Learning is in the business of providing custom content
development services to its customers (in the corporate, government and
education customers sectors) and is the owner of certain proprietary techniques,
methods and/or processes for developing and converting content into online and
cd-rom based courses to individual end users and distributors;

       WHEREAS, EDT Learning and Contractor desire to enter into an agreement
whereby Contractor will provide e-Learning custom content development and
professional services to EDT Learning and indirectly to EDT Learning's Customers
using among other things EDT Learning's Development Software;

       WHEREAS, EDT Learning and Contractor wish to execute this Agreement and
certain subsequent statements of work, which will provide a description of each
specific engagement or project, the associated fees, and the resulting work
products or courses;

       NOW, THEREFORE, EDT Learning and Contractor, in exchange for the mutual
promises and conditions contained herein and other good and valuable
consideration the sufficiency of which is hereby acknowledged, do agree as
follows:

1. DEFINITIONS:

       a.     "Custom Services" shall mean any of the services provided by
              Contractor pursuant to a Statement of Work to EDT Learning and
              indirectly to EDT Learning's Customers, which may include but are
              not limited to: (i) development of Courses incorporating and
              combining Customer Source Material with EDT's Learning Products or
              EDT Learning's Development Software; (ii) customizing and creating
              a Customer's Course using EDT Learning's Development Software;
              (iii) the creation or customization of an existing Customer's
              Course using Customer Source Material and a third party's
              development software for EDT Learning; or, (iv) any other type of
              work or effort on behalf of EDT Learning or its Customer pursuant
              to a Statement of Work executed by the parties hereto.

       b.     "Source Material" shall be the source materials that belong to EDT
              Learning or its Customers that will be used or incorporated into a
              Course as a part of a Statement of Work, including text, pictures,
              graphics, sound files and video files.

       a.     "Customer" shall mean any person or entity that: (i) had prior to
              the Effective Date ever purchased, obtained or received any good,
              service or product from either EDT Learning or from entities that
              have engaged in a merger or asset purchase transaction with EDT
              Learning, (specifically LearningEdge, Inc., ThoughtWare
              Technologies, Inc., Quisic Corporation and Mentergy, Inc.) and
              (ii) any person or entity who does during the period beginning
              with the Effective Date and ending the with termination date of
              this Agreement purchase, obtain or receive any good, service or
              product from EDT Learning.

       d.     A "Contractor Client" shall mean any person or entity with which
              Contractor does business who is not an EDT Learning Customer. If a
              person or entity does business with the

SUBCONTRACTOR AGREEMENT                                             PAGE 1 OF 18

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              Contractor prior to becoming an EDT Learning Customer and then
              subsequently does business with EDT Learning then that person or
              entity will not become a "Customer."

       e.     "Course" shall mean any computer based or web based training,
              instructional or demonstration course that Contractor develops for
              EDT Learning or an EDT Learning Customer and shall also mean the
              Derivative Work and Work Product Contractor creates on behalf of
              EDT Learning for its Customer using the EDT Learning Development
              Software and/or the Contractor Development Software to modify the
              Source Material from one or more Courses.

       f.     "Derivative Work" shall mean any work that is based upon one or
              more preexisting works, EDT Learning Products, EDT Learning
              Development Software, such as a revision, enhancement,
              modification, translation, abridgement, condensation, expansion,
              or any other form in which such preexisting works may be recast,
              transformed or adapted, and that, if prepared without
              authorization of the owner of the copyright in such preexisting
              work, would constitute copyright infringement. For purposes
              hereof, a Derivative Work shall also include any compilation or
              combination that incorporates such preexisting work.

       g.     "EDT Learning Products" means the software and other proprietary
              products developed, owned, leased and /or licensed by EDT
              Learning, and/or the software and other proprietary products
              developed and owned by EDT Learning including LearnLinc(R), or
              learning management systems, and any other software in which EDT
              Learning maintains a proprietary ownership interest.

       h.     "Proprietary Rights" shall mean any and all ownership rights and
              other proprietary rights and interests, including but not limited
              to, patents, patent rights and published or unpublished U.S. and
              foreign patent applications, copyrights, copyrighted materials,
              unpublished research and development information, engineering,
              technical or product specification, designs, processes,
              un-patented inventions, mask ware, mask works, know-how, trade
              secrets, trademarks and their associated good will, trade names,
              service marks and their associated good will, logos, designs,
              technical data, licenses to practice any of the foregoing, and
              physical embodiments of any of the foregoing.

       i.     "Development Software" shall mean the proprietary course
              development tool set and course player developed and owned by EDT
              Learning called i-CanvasTM and any software used or owned by EDT
              Learning and used in conjunction with i-Canvas for the
              development, creation or maintenance of a Course including EDT
              Learning's scripting tool and i-ReviewTM products, together with
              any documentation or materials provided therewith. "Statement of
              Work" shall mean the document between EDT Learning and Contractor
              in which Custom Services will be assigned by EDT Learning to
              Contractor. Each Statement of Work to this Agreement will define
              Custom Services to be provided and shall be mutually agreed to
              between EDT Learning and Contractor and will be executed by both
              parties and shall not be effective or binding upon EDT Learning or
              its Customer until signed by an authorized officer of EDT Learning
              and an authorized officer of Contractor. Each Statement of Work to
              this Agreement may include the description of Custom Services to
              be performed, the rate of compensation in hours and in total,
              expected start and completion date, any acceptance criteria,
              testing criteria, and delivery milestones. Where a Statement of
              Work contains provisions that are inconsistent with this
              Agreement, the inconsistent provisions of the Statement of Work
              shall govern, and all other provisions of this Agreement shall
              remain in full force and effect.

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       k.     "Trademarks" shall mean the marks claimed in good faith by EDT
              Learning to be its proprietary marks (service and trade) which
              include, but are not limited to: "EDT Learning e-Learning
              Simplified" "EDT Learning", "EDT Learning Custom Services Group",
              iCanvas(TM), LearnLinc(R), TestLinc(TM), OfficeLinc(TM),
              SupportLinc(TM), MeetingLinc(TM), ThoughtWare(TM), i-ReviewTM and
              any corresponding design or logo, associated with those Trademarks
              together with their respective stylistic markings and distinctive
              logotypes for such trademarks, trade names and service marks,
              along with all associated goodwill.

       1.     "Work Product" shall mean (i) all of the tangible product or
              result of Contractor's work, including work of Contractor's
              subcontractors, if any, pursuant to any Statement of Work issued
              hereunder or pursuant to any other agreement of EDT Learning and
              Contractor and (ii) all intellectual property and intellectual
              property rights that relate to the business and interests of EDT
              Learning that Contractor conceives, develops or delivers at any
              time during the course of Contractor's performance of any
              Statement of Work issued hereunder or pursuant to any other
              agreement of EDT Learning and Contractor. Notwithstanding the
              foregoing, "Work Product" shall not include Consultant Tools, and
              EDT Learning hereby disclaims any ownership or proprietary
              interest of any kind in any Consultant Tools.

       m.     "Advance Deposits" shall mean monies EDT collects from EDT
              customers for work for which no Statement of Work" has been
              executed.

       n.     "Consultant Tools" shall mean any method, process or technique
              designed and developed by Contractor and used by Contractor in
              connection with providing consulting services under a Statement of
              Work, whether any such method, process or technique was conceived,
              developed or delivered prior to this Agreement or in connection
              with providing services under a Statement of Work that are not
              directly related to, based upon or derived from EDT Learning
              Products, Derivative Work or Development Software. Contractor
              retains ownership of and all rights to any Consultant Tools.
              Except as otherwise expressly provided in a separate, written
              license agreement signed by Contractor, if any, no license or
              other right to the Tools is granted or transferred to any Customer
              or to EDT Learning by this Agreement, any Statement of Work, or
              any Customer Contract.

       o.     "Customer Contract" shall mean any contract or agreement between
              EDT Learning and a Customer (including without limitation any
              master agreement, any amendments and all relevant statements of
              work, including amendments) to which Custom Services relate.

2.     APPOINTMENT AS CONTRACTOR. EDT Learning hereby appoints Contractor, and
       Contractor hereby accepts appointment from EDT Learning, as its sole
       authorized Custom Services contractor, subject to the terms and
       conditions hereof. Contractor agrees to provide to EDT Learning and its
       Customers Custom Services that are described and jointly agreed upon in a
       Statement of Work, as provided in this Agreement, using approved
       development tools including the Development Software. EDT Learning agrees
       that from time to time Contractor may hire subcontractors to assist
       Contractor in providing Custom Services, provided however that the use of
       subcontractors shall not relieve Contractor of any obligation or
       liability under this Agreement or any Statement of Work.

3.     CUSTOM SERVICES. This Agreement is a foundation document to establish the
       working relationship between EDT Learning and Contractor in an
       independent agent principal relationship. EDT Learning and Contractor
       will endeavor to use a Statement of Work in the form attached as EXHIBIT
       "A." Statements of Work will be agreed upon concerning each project
       obtained by EDT Learning from the

SUBCONTRACTOR AGREEMENT                                             PAGE 3 OF 18
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       Customer pursuant to a Customer Contract and will be executed from time
       to time by the parties after the Effective Date. EDT Learning shall
       provide to Contractor, in connection with the negotiation of each
       Statement of Work, a copy of all relevant portions of the Customer
       Contract (including any amendments thereto). Any Statement of Work may be
       supplemented or modified by the parties from time to time, but any
       changes to a Statement of Work shall only be binding if made in writing
       and signed by both parties. The parties will further refine the scope of
       work and the timetables associated with any particular project through
       the development of a project plan and scope document which may supplement
       and/or amend the Statement of Work. Contractor will not attempt to
       negotiate any Statement of Work directly with a Customer and accordingly
       will not attempt to negotiate the price to be paid by the Customer or the
       payment terms available to the Customer. However, Contractor may assist
       EDT Learning in preparation of the Statement of Work by discussing the
       project with the Customer including the nature of the work, the type of
       deliverable, and the timelines associated with the project. Contractor
       will not be authorized to begin the delivery of Custom Services to EDT
       Learning unless and until a Statement of Work is executed by EDT Learning
       and by Contractor authorizing the work.

4.     CONTRACTOR OBLIGATIONS. Upon execution of a relevant Statement of Work,
       issued by EDT Learning to Contractor and agreed to by Contractor in
       writing, Contractor warrants and represents that it will identify and
       allocate the resources required to design, develop and deliver the Custom
       Services to EDT Learning for timely delivery to Customer in accordance
       with the Statement of Work. Contractor shall be fully responsible for,
       and shall exercise all due diligence with respect to, the care and
       protection of any Source Materials which may be in Contractor's
       possession, custody, or control, including but not limited to maintaining
       the confidentiality thereof and preventing any unauthorized access or use
       thereof. Contractor shall ensure that all Courses developed and delivered
       to EDT Learning or its Customers are fully tested and comply with the
       Statement of Work pursuant to which they were developed and delivered.
       Within 30 days after termination of this Agreement Contractor and any
       third parties to whom Contractor has disseminated such Source Materials
       shall provide written verification that all such Source Materials have
       been returned to EDT Learning or its Customers, and neither Contractor
       nor its subcontractors will retain any copies of such Source Materials.
       Contractor agrees that the quality control of the Course and the Custom
       Services provided shall be the sole responsibility of Contractor. Subject
       to Contractor's rights to pursue its remedies under this Agreement,
       Contractor shall perform all Custom Services in a professional and
       expeditious manner and warrants that its services will be of a
       professional quality conforming to generally accepted industry standards
       and procedures. Contractor will conduct its business with EDT Learning
       Customers in a manner that reflects favorably at all times on EDT
       Learning and the good name, goodwill and reputation of EDT Learning.
       Contractor will avoid materially deceptive, misleading or unethical
       practices that are or might be detrimental to EDT Learning or its
       Products. Contractor will make no materially false or misleading
       representations with regard to EDT Learning or the Custom Services and
       will not: (i) employ or cooperate in the publication or employment of any
       materially misleading or deceptive advertising with regard to the Custom
       Services or Products; (ii) make representations, warranties or guarantees
       to the Customers with respect to the specifications, features or
       capabilities of the Custom Services or Courses other than those which are
       consistent with the Statement of Work (or any amendment thereof); or,
       (iii) enter into any contract or engage in any practice in conflict with
       its obligations under this Agreement.

5.     EDT LEARNING OBLIGATIONS. EDT Learning will conduct its business
       activities in a professional and expeditious manner. EDT Learning will
       avoid materially deceptive, misleading or unethical practices that are or
       might be detrimental to Contractor. EDT Learning will make no materially
       false or misleading representations with regard to Contractor or the
       Custom Services and will not: (i) employ or cooperate in the publication
       or employment of any materially misleading or deceptive advertising with
       regard to the Custom Services or Products or (ii) make representations,
       warranties or guarantees

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       to the Customers with respect to the specifications, features or
       capabilities of the Custom Services or Courses other than those which are
       consistent with the Statement of Work.

6.     GRANT OF SOFTWARE LICENSE. Subject to the terms and conditions contained
       herein, EDT Learning hereby grants to Contractor while this Agreement
       remains in effect a non-exclusive, non-transferable, limited license to
       use the Development Software and the EDT Learning Trademarks to provide
       Custom Services to EDT Learning's Customers and to Contractor Clients. It
       is agreed and accepted by the parties that any licenses granted by EDT
       Learning to Contractor herein are limited personal licenses with no right
       to sublicense or sell that license. All proprietary rights in and to the
       Development Software, EDT Learning Products and Trademarks not granted
       herein shall remain fully and exclusively vested in EDT Learning. The
       limited license rights granted pursuant to this Agreement are the only
       rights that Contractor has to the EDT Learning Development Software, EDT
       Learning Products and Trademarks. During the term of this Agreement and
       in consideration for its execution, Contractor will be provided a fifty
       (50) user license to the i-Canvas software, including maintenance,
       support and upgrades without charge to Contractor. Upon termination of
       this Agreement, Contractor will have the right during the ninety (90) day
       period following the termination date to purchase licenses of the
       i-Canvas software at the lesser of the then current price or 80% of the
       price of i-Canvas at the Effective Date of this Agreement with the
       i-Canvas license purchased by Contractor being granted on EDT Learning's
       standard end user license terms. Unless and until this Agreement is
       terminated, Contractor may modify the source code of the i-Canvas
       software from time to time for use on a Customer's or Contractor Client's
       project. Prior to modification, Contractor will notify EDT Learning of
       the proposed change. Any changes to the i-Canvas software or any other
       EDT Learning Products or Development Software made by Contractor,
       regardless of the nature of the change or the timing of the change, will
       at all times exclusively vest in EDT Learning with all right title and
       interest in and to the i-Canvas software or any other EDT Learning
       Products or Development Software, and such changes shall be considered
       work-for-hire by Contractor on EDT Learning's behalf, without
       compensation of any nature to Contractor for the work performed or the
       value of the resulting modified software or product. Except and expressly
       authorized in writing by EDT Learning, Contractor shall not modify,
       translate, reverse engineer, de-compile or disassemble the Development
       Software or the EDT Learning Products or any portion thereof. Contractor
       agrees that is will use the Development Software only for the purposes of
       performing Custom Services or developing Courses for Contractor Clients
       and EDT Learning's Customers. Unless a license is purchased, Contractor
       agrees that within 30 days after termination of this Agreement, then
       Contractor will immediately return to EDT Learning all copies of
       Development Software or the EDT Learning Products, whether in the
       possession of Contractor or any subcontractor, and the license granted
       will immediately cease. Contractor will also receive such concurrent user
       licenses as EDT Learning reasonably determines necessary to use the
       LearnLinc(R) virtual classroom software for the exclusive purpose of
       internal use (the "Internal Use License") by Contractor while this
       Agreement remains in effect. The Internal Use Licenses will include free
       maintenance, support and upgrades while this Agreement remains in effect.
       Contractor will be able to use the Internal Use Licenses for the
       exclusive purpose of: (a) training its own employees; (b) providing
       training and support to those person who will be using the Courses
       created by Contractor; or (c) providing to Customers and Contractor
       Clients ongoing review and modification of the Courses while in
       development or during maintenance periods. Contractor shall not use the
       Internal Use Licenses to compete with EDT Learning and shall not directly
       or indirectly sell, re-sell, deliver, distribute, transfer, lease,
       sub-lease, sub-license or otherwise make available for use by an End User
       the Internal Use Licenses other than those in the direct employment of
       Contractor.

7.     OFFICE SHARING ARRANGEMENT. Unless and until this Agreement is terminated
       and in consideration for the Contractor Payments (hereinafter defined),
       EDT Learning will provide to Contractor use of an appropriate amount of
       square feet of EDT Learning's premises (located at 2999 N. 44th Street,
       Suite

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       620, Phoenix, Arizona) (the "Premises") and facilities for the support of
       up to 45 fulltime employees who work for Contractor (the "Contractor
       Space"). Should Contractor need more square footage than the Contractor
       Space provided then Contractor and EDT Learning may engage in a separate
       sublease agreement concerning some other portion of EDT Learning's
       Premises or Contractor may seek other additional premises outside of the
       EDT Learning's Premises. Unless and until this Agreement is terminated
       and in consideration for the Contractor Payments, EDT Learning will
       provide to Contractor use of its office equipment, office furniture and
       general office suite services (the "Executive Suite Services") which is
       necessary to provide the Custom Services to EDT Learning that will
       include at no additional cost to Contractor office cubicles, desks,
       computers, software, telephones, internet access, long distance, fax,
       copier, office supplies and postage without itemization. Should EDT
       Learning vacate the Premises for any reason and not provide equivalent
       space reasonably acceptable to Contractor, then, on and after the date of
       vacancy of the Premises, the obligation to provide Contractor Space and
       the obligations related to the Executive Suite Services shall terminate
       and the Percentage (as defined below) shall be reduced by one-half and
       the fees due to Contractor under Section 9b shall be increased to 90%
       from 80% of the Net Fees as defined therein. In the event of vacancy of
       the Premises, other than the foregoing changes in the Percentage and the
       amount due to Contractor the obligations of Contractor to EDT Learning
       concerning the Contractor Payments shall continue during the Term hereof.
       In consideration for the Executive Suite Services and use of the
       Contractor Space provided and other good and valuable consideration, then
       Contractor will (the "Contractor Payments"): (a) provide to EDT Learning
       each month that this Agreement remains in effect, at no additional
       charge, 80 hours of Custom Services for the creation of product
       demonstration, sales and marketing literature, web site enhancements and
       other creative services for use by EDT Learning, but not as part of the
       Custom Services provided to Customers; (b) reimburse one half of the base
       compensation of the sales executive which is focused on the sale of
       Custom Services (currently Ms. Sue Leff) in an amount up to $2,500 per
       month; (c) pay a percentage (the "Percentage") of the collected revenues
       associated with the sale of Custom Services to Contractor's Clients
       (i.e., revenues to persons other than EDT Learning Customers, the
       "Collected Revenues") based upon the following table:

<TABLE>
<S>                 <C>
--------------------------------------------------------------------------------------------------
COLLECTED REVENUES BY           DURING THE FIRST      DURING THE SECOND      AFTER THE SECOND
CONTRACTOR                      12 MONTHS FROM THE    12 MONTHS FROM THE     ANNIVERSARY OF THE
                                EFFECTIVE DATE        EFFECTIVE DATE         EFFECTIVE DATE
--------------------------------------------------------------------------------------------------
Less than $2 million            20%                   20%                    20%
BETWEEN $2 AND $4 MILLION       15%                   15%                    15%
BETWEEN $4 AND $5 MILLION       10%                   10%                    10%
OVER $5 MILLION                 10%                   5%                     0%
--------------------------------------------------------------------------------------------------
</TABLE>

       EDT Learning will maintain a fulltime sales representative who is
       dedicated to the sale of Custom Services (the "Contractor Payments").
       However, should EDT Learning terminate that sales associate and no longer
       employ a person who is dedicated to the sale of Custom Services, then
       Contractor on the termination date of that dedicated sales person will no
       longer provide to EDT Learning reimbursement of any sales person's
       compensation. If EDT Learning desires to hire and/or assign a new
       salesperson dedicated to the sale of Custom Services then Contractor will
       have the right to approve or disapprove the assignment/hire and upon
       their hiring the obligation to reimburse for one half of their
       compensation shall again resume.

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8.     LOYALTY AND EXCLUSIVITY.

       a.     Each party warrants and represents to the other party that:

              i.     During the term of this Agreement and for the one (1) year
                     period after termination of this Agreement, neither party
                     will solicit for hire or hire any employee of the other
                     party.

              ii.    During the term of this Agreement and for the three (3)
                     year period after termination of this Agreement, Contractor
                     will not solicit any Customer of EDT Learning (or
                     facilitate the solicitation of any Customer by any third
                     party) for the purpose of the sale of the Custom Services
                     or other product or service which is competitive with that
                     of the products and services sold by EDT Learning as of the
                     termination date of this Agreement other than pursuant to
                     the terms and conditions of this Agreement, and EDT
                     Learning will not solicit any Contractor Client for the
                     purpose of the sale of the Custom Services..

              iii.   During the term of this Agreement and for the one (1) year
                     period after termination of this Agreement, Contractor will
                     not solicit any Value Added Reseller or referral partner of
                     EDT Learning (or facilitate the solicitation by any third
                     party), including but not limited to SkillSoft, for the
                     purpose of the sale of the Custom Services or other product
                     or service which is competitive with that of the products
                     and services sold by EDT Learning as of the termination
                     date of this Agreement, other than pursuant to the terms
                     and conditions of this Agreement. During the term of this
                     Agreement and for the one (1) year period after termination
                     of this Agreement, EDT Learning will not solicit any
                     distribution or referral partner of Contractor (or
                     facilitate the solicitation by any third party), for the
                     purpose of the sale of the Custom Services, other than
                     pursuant to the terms and conditions of this Agreement

              iv.    During the term of this Agreement and for the three (3)
                     year period after termination of this Agreement, each party
                     represents and covenants that it will not (either
                     personally, or through any individual association,
                     partnership, corporation or other entity) intentionally
                     disclose any Trade Secret or Confidential Information of
                     the other party to any person, (or any association,
                     partnership, corporation or other entity) for any reason or
                     purpose whatsoever, except as may be required by this
                     Agreement, a Statement of Work or operation and compulsion
                     of law.

       b.     Each party represents and warrants that its training and
              experience are such that the restrictions contained in this
              section, in general and in this paragraph specifically, shall not
              result in an inability on its part to pursue a livelihood, and
              that other alternatives or employment or business endeavors are
              reasonably available with these covenants fully enforced. Each
              party expressly agrees that the duration, geographical limitations
              and description of the prohibited conduct described in these
              representations and covenants are reasonable and that such party
              has given valuable consideration for the representations and
              covenants contained in this section. Each party agrees that the
              representations and covenants contained in this section are a
              material inducement for the other party to enter into this
              Agreement. Because each party has negotiated and agreed to the
              limitations and restrictions contained in this section, such Party
              expressly waives the right to later protest the reasonableness of
              the limitations, warranties, geographical limitations and
              prohibited conduct specified in these restrictive representations
              and covenants. Each party agrees that any

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              compensation or fee due to such party may be offset by any damages
              sustained by the other party should Contractor materially breach
              the foregoing restrictive covenants after notice and failure to
              cure such breach. Each party agrees that the other party would be
              immediately and irreparably harmed in the event of breach by it
              and therefore enforcement by immediately obtaining an injunction
              would be proper; and each party agrees that the amount of surety
              bond if any required shall not exceed $500.00.

9. FEES, PAYMENT TERMS AND CANCELLATION.

       a.     EDT Learning and Contractor agree that the fees charged to
              Customers for the Custom Services shall be mutually agreed upon by
              both parties prior to the execution of a Statement of Work between
              EDT Learning and the Customer. Attached hereto in EXHIBIT "B" is
              Contractor's current standard fee schedule for the provision of
              Custom Services. EXHIBIT "B" is subject to modification by
              Contractor on at least 90 days prior written notice by Contractor.
              Any deviation from the standard rates for any Statement of Work
              shall be mutually agreed upon by both parties prior to quotation
              of the prices for the Custom Services to the Customer.

       b.     Only EDT Learning will bill and collect from the EDT Learning
              Customer and accordingly Contractor will only look to EDT Learning
              for collection of any fees and charges due to Contractor from such
              Customer, including for work performed pursuant to this Agreement
              or any applicable Statement of Work. EDT Learning shall make
              reasonable commercial efforts to collect such fees and charges,
              and in connection therewith and will provide to Contractor a
              weekly written report of EDT Learning's aged accounts receivable,
              cash collections and such other related information that
              Consultant reasonably requests concerning Custom Services. EDT
              Learning represents that it shall not write off its accounts
              receivable arising from Custom Services performed by Contractor
              except for appropriate reserves and write offs due to
              uncollectability. Notwithstanding the foregoing, Contractor may
              bill and collect from any Contractor Client who is not an EDT
              Learning Customer. The fees due to Contractor will be equal to
              eighty percent (80%) of the Net Fee received by EDT Learning from
              the Customer for the Custom Services provided by EDT Learning to
              Customer. The term "Net Fee" shall mean the amount of the fee paid
              by Customer to EDT Learning after deduction of the sales
              commission (the amount of which is subject to mutual agreement by
              EDT Learning and Contractor) due to the EDT Learning sales
              executive who was responsible for the sale of the Statement of
              Work and shall not include any sales or other taxes collected by
              EDT Learning and remitted to any taxing authority. By way of
              example but not limitation, should EDT Learning's sales person
              receive 10% of the total revenue earned and a project derive
              revenue of $100,000, then Contractor shall be due a cash fee equal
              to $72,000 with EDT Learning retaining the remaining cash
              associated with the revenue of $18,000.

       c.     Payments to Contractor of the Net Fee will be due upon the
              collection of cash from the Customer and which is earned revenue
              on an accrual basis in 'accordance with GAAP (matching the
              payments from the customer) and will be tendered to Contractor
              within three (3) business days of its receipt by EDT Learning.
              However, EDT Learning will have no obligation to tender to
              Contractor any portion of any Advance Deposits received by EDT
              Learning. If EDT Learning receives a deposit of money from a
              Customer in advance of the Net Fee being due and payable, then EDT
              Learning will advance to Contractor an amount equal to eighty
              percent (80%) of that deposit after deduction of the sales
              commission (the "Deposit"), provided, however, that such Deposit
              shall remain a liability of Contractor to EDT Learning unless and
              until earned by Contractor under the applicable accrual rules. By
              way of example but not limitation, should EDT Learning's sales
              person receive 10% of the

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              total revenue earned and the Customer tenders a deposit of
              $10,000, then Contractor will receive a cash Deposit equal to
              $7,200 with EDT Learning retaining the remaining cash associated
              with the deposit of $1,800. Only Custom Services which are
              resulting from executed Statements of Work on and after the
              Effective Date of this Agreement will result in a Net Fee due to
              Contractor. Contractor will not be entitled to any portion of any
              accounts receivable on EDT Learning's books prior to the Effective
              Date. Contractor and EDT Learning will apportion any work in
              process which is ongoing (i.e., partially completed projects prior
              to the Effective Date) and only the agreed upon un-completed
              portion of any work in progress will be subject to any Net Fee or
              sharing between EDT Learning and Contractor. EDT Learning and
              Contractor will execute separate Statements of Work for projects
              that are in partial completion and for which a Net Fee is due. All
              payments to Contractor shall be made in United States dollars. EDT
              Learning will provide to Contractor a weekly written report in
              reasonable detail itemizing cash receipts for payments received
              for Custom Services. Contractor will have right to audit upon
              reasonable notice and during normal business hours EDT's books and
              records concerning custom content development services that are
              provided to Customers. EDT Learning will be responsible for the
              collection of and payment of all taxes that are imposed on the
              Custom Services delivered to Customer, including any sales taxes.
              Notwithstanding any other provision of this Agreement, if EDT
              Learning fails to make any payment of the Net Fee within the three
              (3) days specified above, then in addition to any other remedies
              available under this Agreement Contractor shall have the right,
              but not the obligation, to immediately suspend all work under the
              Statement of Work and/or terminate the Statement of Work in its
              entirety.

10. CHANGE MANAGEMENT PROCEDURES.

       a.     CANCELLATION OF STATEMENTS OF WORK. Once a Statement of Work has
              been executed by the parties, then EDT Learning may cancel such
              outstanding Statement of Work by providing to Contractor written
              notice of such cancellation in the event that: (i) the Customer
              cancels the Customer Contract to for which the Statement of Work
              provides Custom Services; (ii) the Contractor and EDT Learning
              mutually cancel the Statement of Work; or, (iii) Contractor
              breaches the Statement of Work and fails to cure such breach
              pursuant to Section 18b. hereof. Cancellation of a Statement of
              Work will be effective on the later of the date provided in the
              notice or the date Contractor receives written notice of
              cancellation. In the event of a cancellation of a Statement of
              Work, EDT Learning shall reimburse Contractor for all expenses
              incurred and for all Custom Services performed through and
              including the effective date of the cancellation. The fee due at
              cancellation for the services performed shall be based upon the
              hours expended and rates provided in the applicable Statement of
              Work (or if the specific hourly rates are not provided in the
              Statement of Work then the fee due to Contractor shall be based
              upon Contractor's standard hourly rate schedule).

       b.     REQUIREMENT OF CHANGE ORDERS. Any changes, modifications, or
              additions to the obligations of either party or to any other
              material aspect of a Statement of Work will require a written
              Change Order prepared by either party and mutually agreed to by
              the parties. Either party may initiate a Change Order by sending
              the Change Order to the other party for review and approval. All
              Change Orders will conform to the template set forth in EXHIBIT
              "C" and may contain, but will not be limited to, the following
              information, as applicable:

                     i. A description of any additional work to be performed
                     and/or changes to the performance required of either party,
                     including the estimated number and skill level of personnel
                     necessary to make such changes and/or additions and the
                     availability of such personnel over the ensuing period;

SUBCONTRACTOR AGREEMENT                                             PAGE 9 OF 18
<PAGE>

                     ii. A statement of the impact of the work or changes on the
                     services or other requirements of this Agreement;

                     iii. The estimated timetable to complete the work specified
                     in the Change Order;

                     iv. The impact, if any, on the schedule or fees;

                     v. Acceptance criteria for such work; and,

                     vi. Signatures of both parties.

       c.     ACCEPTANCE OF CHANGE ORDER. Within five (5) days of the submission
              of a Change Order to either party, the other party will notify the
              party submitting the Change Order of its acceptance or rejection
              of the proposed change or addition in writing. Failure to respond
              to such a request will not be deemed to constitute acceptance of
              such Change Order request.

11.    WARRANTY.

       a.     Contractor represents and warrants that:

              i.     All work undertaken by it to provide Custom Services, all
                     Courses, and all Work Product shall be accomplished in a
                     professional and workmanlike manner, and in accordance with
                     industry standards, and in accordance with this Agreement
                     and the applicable Statement of Work; and,

              ii.    All software, content and other material provided to EDT
                     Learning or EDT Learning Customer, including Contractor
                     Work Product and covered Derivative Works do not and will
                     not, to its knowledge, violate any copyright, trademark,
                     service mark, trade secrets, U.S. patents, proprietary
                     right or personal right of any third party, including any
                     right of privacy or publicity and will not contain any
                     defamatory or obscene statement or material.

       b.     EDT Learning represents and warrants that the Development Software
              and EDT Learning Products and other material provided to
              Contractor for a Customer do not and will not, to its knowledge,
              violate any copyright, trademark, service mark, trade secrets,
              U.S. patents, proprietary right or personal right of any third
              party, including any right of privacy or publicity, and that they
              are original works for which EDT Learning has the right, power and
              authority to convey the licenses to Contractor or Contractor's
              subcontractors contemplated by this Agreement.

12.    LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
       AGREEMENT, EDT LEARNING AND CONTRACTOR MAKE AND RECEIVE EACH TO THE OTHER
       NO WARRANTIES, EXPRESS, IMPLIED, STATUTORY, ARISING FROM THE COURSE OF
       DEALING OR USEAGE OF TRADE, OR OTHERWISE, AND EACH PARTY SPECIFICALLY
       DISCLAIMS ANY WARRANTIES OF TITLE, QUIET ENJOYMENT, ABSENCE OF SECURITY
       INTEREST, LIEN OR ENCUMBRANCE, NONINFRINGEMENT, MERCHANTABILITY AND/OR
       FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
       HEREIN (INDEMNIFICATION), NEITHER EDT LEARNING NOR CONTRACTOR SHALL BE
       LIABLE FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL EXEMPLARY, OR
       PUNITIVE DAMAGES RELATING TO OR ARISING FROM ANY BREACH OR ALLEGED BREACH
       OF THIS AGREEMENT, OR

SUBCONTRACTOR AGREEMENT                                            PAGE 10 OF 18
<PAGE>

       FROM ANY PRODUCTS, SERVICES OR OTHER ACTIONS OR OMISSIONS CONNECTED WITH
       OR UNDERTAKEN PURSUANT TO THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR
       THEORY OF LIABILITY, (WHETHER BASED UPON BREACH OF CONTRACT OR WARRANTY,
       STRICT LIABILITY, NEGLIGENCE, TORT OR OTHERWISE), INCLUDING, WITHOUT
       LIMITATION, LOST PROFITS OR INJURY TO BUSINESS, REGARDLESS OF WHETHER THE
       OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EDT
       LEARNING'S LIABILITY FOR DAMAGES RELATING TO OR ARISING FROM ANY ALLEGED
       BREACH OF THIS AGREEMENT, OR PRODUCT, SERVICE ACT OR OMISSION IN
       CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED THE BALANCE OF PROJECT
       PRICE PAYABLE TO CONTRACTOR WITH RESPECT TO COMPLETED COURSES PREVIOUSLY
       DEVELOPED PURSUANT TO THE STATEMENT OF WORK DELIVERED BY EDT LEARNING TO
       CONTRACTOR PURSUANT TO THIS AGREEMENT AND PRIOR TO EXPIRATION OR
       TERMINATION OF THIS AGREEMENT. CONTRACTOR'S LIABILITY FOR DAMAGES
       RELATING TO OR ARISING FROM ANY ALLEGED BREACH OF THIS AGREEMENT SHALL
       NOT EXCEED THE AMOUNT OF PROJECT PRICE ALREADY PAID BY EDT LEARNING WITH
       RESPECT TO STATEMENT OF WORK ISSUED PURSUANT TO THIS AGREEMENT. IN NO
       EVENT SHALL EDT LEARNING'S OR CONTRACTOR'S RESPECTIVE AFFILIATES, OR THE
       RESPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
       REPRESENTATIVES OF EDT LEARNING OR CONTRACTOR, BE LIABLE FOR ANY CLAIMS
       OR DAMAGES RELATING TO OR ARISING FROM ANY BREACH OR ALLEGED BREACH OF
       THIS AGREEMENT, OR FROM ANY PRODUCTS, SERVICES OR OTHER ACTIONS OR
       OMISSIONS CONNECTED WITH OR UNDERTAKEN PURSUANT TO THIS AGREEMENT, UNDER
       ANY CAUSE OF ACTION OR THEORY OF LIABILITY, (WHETHER BASED UPON BREACH OF
       CONTRACT OR WARRANTY, STRICT LIABILITY, NEGLIGENCE, TORT OR OTHERWISE),
       INCLUDING, BUT NOT LIMITED TO, INDIRECT, SPECIAL, CONSEQUENTIAL,
       INCIDENTAL, EXEMPLARY, OR PUNITIVE DAMAGES, OR THIRD PARTY CLAIMS,
       INCLUDING WITHOUT LIMITATION LOST PROFITS OR INJURY TO BUSINESS,
       REGARDLESS OF WHETHER SUCH INDIVIDUALS OR ENTITIES HAVE BEEN OR ARE
       ADVISED OR KNOW OR SHOULD KNOW OF THE POSSIBILITY OF SUCH DAMAGES.

13.    INDEMNIFICATION.

       a.     BY CONTRACTOR. Contractor hereby agrees to indemnify, defend and
              hold harmless EDT Learning, its affiliates, and their respective
              shareholders, officers, directors, employees, agents and
              representatives from and against any and all third party claims or
              proceedings ("Claims") for causes of action, demands, liabilities,
              obligations, losses, damages, judgments, costs and expenses
              (including reasonable attorney's fees and expert witness fees) of
              any kind whatsoever: (a) which arise directly or indirectly out
              any breach of a Statement of Work by Contractor or its
              subcontractors; (b) which arise directly or indirectly under any
              agreement between Contractor and any Contractor Client; (c) which
              are based on an allegation that any materials, Custom Services,
              covered Derivative Works, Customer's Courses, or Work Product
              provided by Contractor hereunder infringe any Proprietary Rights
              of third parties provided that such infringement in not caused in
              whole or in part by EDT Learning Products; or, (d) which are
              claims by Contractor's employees for any wage, compensation,
              taxes, benefits, vacation pay, insurance, workman's compensation
              or other employment claims based upon the employment of such
              person by Contractor.

       b.     BY EDT LEARNING. EDT Learning hereby agrees to indemnify, defend
              and hold harmless Contractor, its affiliates, and their respective
              shareholders, officers, directors,

SUBCONTRACTOR AGREEMENT                                            PAGE 11 OF 18
<PAGE>

              employees, agents and representatives from and against any and all
              Claims of any kind whatsoever: (a) which arise directly or
              indirectly out any breach of a Statement of Work by EDT Learning;
              (b) which arise directly or indirectly under any Customer Contract
              (other than a breach of the related Statement of Work by
              Contractor or its subcontractors); (c) which are based on an
              allegation that any EDT Learning Products infringe any Proprietary
              Rights of third parties; or, (D) which are claims by EDT
              Learning's employees for any wage, compensation, taxes, benefits,
              vacation pay, insurance, workman's compensation or other
              employment claims based upon the employment of such person by EDT
              Learning.

       c.     PROCEDURES. A party's obligation to indemnify the other party
              hereunder is conditioned upon such other party providing prompt
              written notice to the indemnifying party of an Claim and
              cooperating (at no out-of-pocket cost) with the indemnifying party
              in all reasonable respects.

14.    INDEPENDENT CONTRACTOR RELATIONSHIP BETWEEN PARTIES. Contractor
       represents and warrants that it, and not EDT Learning, is the employer of
       Contractor's employees and that it is solely responsible for complying
       with all laws, rules and regulations of any governmental authority having
       appropriate jurisdiction relating to such employment, including, but not
       limited to, immigration, taxation, worker compensation and unemployment
       compensation. EDT Learning and Contractor are independent contractors,
       and neither party will have the power to bind the other or incur
       obligations on the other's behalf without the other's prior written
       consent. The parties agree that Contractor shall retain sole discretion
       and judgment in the manner the services are to be performed. Neither
       party is, nor shall be considered to be, an agent, distributor, partner,
       joint venture or representative of the other party for any purpose.

15.    CONFIDENTIAL INFORMATION. The term "Confidential Information" means, with
       respect to each party information which relates to a party's business,
       research, development, programs, costs, customers or general activities
       that is held in confidence by such party, including information that is
       designated as confidential or that, by its nature, should be considered
       confidential, including the terms of this Agreement, information relating
       to the Development Software, Source Material, EDT Learning Products, Work
       Products, Custom Services and Customers.. Each party (and its agents and
       licensors) will not disclose to any third party (except as required by
       law or government requests/orders or to its attorneys, accountants and
       other advisors as reasonably necessary), any of the Confidential
       Information. If law requires disclosure of Confidential Information, the
       party receiving the request will give prior written notice to the other
       to permit the other to contest such disclosure. Each party agrees to
       protect the confidentiality of the Confidential Information with at least
       the same degree of care it takes to protect its own Confidential
       Information. Neither party has any confidentiality obligations regarding
       information that enters into the public domain without breach of this
       Agreement; that it receives from a third party without restrictions on
       disclosure and without breach of a nondisclosure obligation; or that it
       has developed internally.

16.    RIGHTS IN WORK PRODUCT.

       a.     WORK PRODUCT. All Work Product created or prepared by Contractor
              for EDT Learning pursuant to this Agreement whether or not
              prepared on or off the premises of EDT Learning or during regular
              work hours shall be the sole and exclusive property of EDT
              Learning.

       b.     EXCLUDED ITEMS. EDT Learning hereby disclaims any ownership in,
              and Contractor shall not be required to assign to EDT Learning,
              any invention, discovery, innovation or improvement of Contractor
              which does not involve any of EDT Learning Products or Development

SUBCONTRACTOR AGREEMENT                                            PAGE 12 OF 18

<PAGE>

              Software or Contractor Tools (the "Excluded Inventions"). In any
              Dispute with respect to these exclusions, the burden of proof will
              be on Contractor to show that the exclusion applies.

17.    INSURANCE. Contractor agrees to obtain and maintain insurance which is
       required by any Statement of Work or that is required by the Customer of
       EDT Learning, including the following:

       a.     Workers' Compensation insurance in an amount sufficient by virtue
              of the laws of the State of Arizona;

       b.     General Liability insurance in which the limit of liability for
              injuries, including accidental death, and property damage is no
              less than U.S. $1,000,000 for any one occurrence;

       c.     Professional Liability (errors & omissions): with limits of not
              less than $1,000,000 each occurrence; and,

       d.     Automobile insurance in which the limit of liability for injuries,
              including accidental death, and property damage is no less than
              U.S. $1,000,000 for any one occurrence.

18.    TERM AND TERMINATION.

       a.     TERM. The initial term of this Agreement will be thirty-six (36)
              months from the Effective Date of this Agreement (the "Initial
              Term"), unless terminated as provided herein with the date upon
              which termination is to occur provided in the Notice of
              Termination (the "Termination Date").

       b.     BREACH. In the event that either party hereto breaches in the
              substantial performance of any material obligation specified
              herein or in any Statement of Work, the non-breaching party shall
              notify the other party hereof in writing and, if such breach is
              not remedied within thirty (30) days from the date of such notice,
              then the non-breaching party shall have the right to terminate
              this Agreement and all outstanding Statements of Work immediately.

       c.     FINANCIAL DIFFICULTY. This Agreement shall automatically terminate
              if any of the following take place with regard to the other party:
              such party makes a general assignment or general arrangement for
              the benefit of its creditors; the filing by or against such party
              of a petition to have it adjudged bankrupt or of a petition for
              reorganization or arrangement of such party under any law relating
              to bankruptcy or insolvency unless, in the case of a filing
              against such party, the same is dismissed within thirty (30) days;
              the appointment of a trustee or a receiver to take possession of
              substantially all of such party's assets or its interests in this
              Agreement, where such possession is not restored within thirty
              (30) days; or the attachment, execution or other judicial seizure
              of substantially all of such party's assets or its interests in
              this Agreement, where such seizure is not discharged within thirty
              (30) days.

       d.     VOLUNTARY TERMINATION. After the Initial Term, this Agreement
              shall continue from month to month unless and until terminated
              upon delivery by either party of thirty (30) days prior written
              notice of a party's intent to terminate (the "Termination Date").

       e.     EFFECT UPON TERMINATION. No new Statements of Work may be entered
              into after the Termination Date, but termination of this Agreement
              by either party will not cause the automatic cancellation of any
              pending Statement of Work signed by both parties prior to the
              Termination Date (the "Remaining Statements of Work"). Services to
              be performed under Remaining Statements of Work will continue
              until completion, unless Customer cancels any

SUBCONTRACTOR AGREEMENT                                            PAGE 13 OF 18
<PAGE>

              or all of the Remaining Statements of Work as provided herein.
              This Agreement will remain in effect with respect to the Remaining
              Statements of Work until their completion, at which time this
              Agreement will automatically terminate.

19.    MISCELLANEOUS PROVISIONS.

       a.     FORCE MAJEURE. Either party's non-performance shall be excused to
              the extent that performance is impossible due to reasons beyond
              such party's control.

       b.     GOVERNMENT REGULATIONS. Contractor will not export, re-export,
              transfer, or make available, whether directly or indirectly, any
              regulated item or information to anyone outside the U.S. in
              connection with this Agreement without first complying with all
              export control laws and regulations which may be imposed by the
              U.S. government and any country or organization of nations within
              whose jurisdiction Customer operates or does business.

       c.     GOVERNING LAW. This Agreement is made under and will be governed
              by and construed in accordance with the laws of the State of
              Arizona (except that body of law controlling conflicts of law) and
              specifically excluding from application to this Agreement that law
              known as the United Nations Convention on the International Sale
              of Goods. Notwithstanding the foregoing, claims seeking injunctive
              relief for Services in accordance with this Agreement may be
              brought in any state or federal court of competent jurisdiction.
              The prevailing party in any litigation between the parties shall
              recover its reasonable attorneys' fees and costs from the
              non-prevailing party.

       d.     SEVERABILITY; WAIVER. In the event any provision of this Agreement
              is held to be unenforceable, the remaining provisions of this
              Agreement will remain in full force and effect, and the
              unenforceable provisions will be construed in accordance with
              applicable law as nearly as possible to reflect the original
              intention of the parties. The waiver of any breach or default of
              this Agreement will not constitute a waiver of any subsequent
              breach or default, and will not act to amend or negate the rights
              of the waiving party.

       e.     ASSIGNMENT. Contractor may not assign this Agreement, whether by
              operation of law or otherwise, without the prior written consent
              of EDT Learning, and any purported assignment without such consent
              will be void. The rights and obligations of EDT Learning hereunder
              may be assigned to an EDT Learning affiliate, or to an individual
              or entity that acquires all or substantially all of the assets or
              shares of EDT Learning, or with whom EDT Learning merges. This
              Agreement will bind and inure to the benefit of each party's
              permitted successors and assigns.

       f.     NOTICES. Any written notices, demands or other communications
              required or permitted by this Agreement must be given in English
              language and delivered via registered or certified air mail,
              return receipt requested, postage prepaid or by overnight courier
              or transmitted via telegraph, telex or telefax as follows: If to
              EDT Learning at 2999 N. 44th Street, Suite 650, Phoenix, AZ 85018,
              (602-952-0544 -- FAX) or if to Contractor at the address
              identified as Contractor's principal place of business. Delivery
              shall be deemed to have occurred upon receipt and/or transmission
              validation for telex and telefax. All notices are to be forwarded
              to the parties at their respective addresses stated hereinabove,
              unless either party furnishes written notice as to a change of its
              address in the manner provided hereinabove.

       g.     CONTRARY, INCONSISTENT, OR ADDITIONAL TERMS. Any contrary,
              inconsistent, or additional terms contained in a mutually executed
              Statement of Work between EDT Learning and Contractor

SUBCONTRACTOR AGREEMENT                                            PAGE 14 OF 18

<PAGE>

              securing such services, as compared to the terms and conditions
              contained in this Agreement, will be governed, interpreted, and
              construed in the following order of precedence: (i) the applicable
              Statement of Work and (ii) this Agreement. Any pre-printed terms
              and conditions on any materials, which EDT Learning regularly uses
              with its other customers, will be null and void and of no
              consequence whatsoever in interpreting the parties' legal rights
              and responsibilities as they pertain to any of the contemplated
              services provided hereunder. Should the terms of this Agreement or
              the existence of this Agreement itself cause a change in the
              ability of EDT Learning to recognize revenue from the sale of
              Custom Services or cause any change in the value of any of EDT
              Learning's assets, then the parties agree that they will either
              modify this Agreement to avoid that occurrence or will mutually
              terminate this Agreement.

       h.     ENTIRE AGREEMENT; COUNTERPARTS; ORIGINALS. This Agreement,
              including all documents incorporated herein by reference,
              constitutes the entire agreement between the parties with respect
              to the Custom Services, and supersedes all prior or
              contemporaneous agreements, written and oral, regarding the Custom
              Services. This Agreement may be executed in counterparts, each of
              which will be deemed an original, but both of which together shall
              constitute one and the same instrument. This Agreement may be
              changed only by a written document signed by authorized
              representatives of both parties.

       i.     AUTHORITY. Authorized representatives of EDT Learning and
              Contractor have read the foregoing and all documents incorporated
              therein and agree and accept such terms effective as of the date
              set forth beneath such party's signature.

       Executed as indicated below to be effective as indicated on the first
date written above.

INTERACTIVE ALCHEMY, INC.                     EDT Learning, Inc.

By: /s/ Donald C. Pierson                     By: /s/ James M. Powers
    --------------------------------              ------------------------------
Printed Name: Donald C. Pierson, III          Printed Name: James M. Powers, Jr.
Title: President                              Title: President
Date:  5-31-03                                Date:  5-13-03

SUBCONTRACTOR AGREEMENT                                            PAGE 15 OF 18
<PAGE>

                                   EXHIBIT "A"

                            FORM OF STATEMENT OF WORK

       The following document is the form of Statement of Work that will be the
basis for any work performed by Contractor for EDT Learning, with the actual
terms and conditions varying from project to project as needed.

             [The remainder of this page intentionally left blank.]

SUBCONTRACTOR AGREEMENT                                            PAGE 16 OF 18
<PAGE>

                                WORK ORDER FORM
   (ASSOCIATED WITH SUBCONTRACTOR AGREEMENT BETWEEN INTERACTIVE ALCHEMY, INC.
                            AND EDT LEARNING, INC.)

       This Work Order defines certain Services to be performed by Interactive
Alchemy, Inc. ("Subcontractor") in accordance with the terms and conditions of
the Subcontractor Agreement ("Agreement") dated May 1, 2003 by and between
Subcontractor and EDT Learning, Inc. The EDT Learning client associated with
this Work Order is _________________ ("Client")

--------------------------------------------------------------------------------
EDT CUSTOMER NUMBER:
--------------------------------------------------------------------------------
EDT CUSTOMER NAME:
--------------------------------------------------------------------------------
EDT CUSTOMER CONTACT       Name:
INFORMATION:
                           -----------------------------------------------------
                           Contact:

                           -----------------------------------------------------
                           Title:

                           -----------------------------------------------------
                           Address:

                           -----------------------------------------------------
                           Phone:

                           -----------------------------------------------------
                           Fax:

                           -----------------------------------------------------
                           Email:
--------------------------------------------------------------------------------
DOCUMENTS NEEDED:                o   Services Agreement
                                 o   Work Order
--------------------------------------------------------------------------------

BACKGROUND:

SCOPE OF WORK (DELIVERABLES):

o        ___ hours of training

o        Training will be delivered in the following formats:
         |_| Web-based    |_| Computer-based   |_| Instructor-led   |_| Other
         Comments:______________________________________________________________
         _______________________________________________________________________

o        Training will be developed from the following materials to be provided
         by the Customer
         |_| On-Line (WBT)  |_| Self-paced (CBT)  |_| Instructor-led  |_| None
         |_| Other
         Comments:______________________________________________________________
         _______________________________________________________________________

o        The training will be developed by adapting existing content in the
         following manner(1)
         |_| Repurpose  |_| Rewrite/Produce new  |_| Not applicable
         Comments:______________________________________________________________
         _______________________________________________________________________

o        Tier:

         |_| 1    |_| 2    |_| 3   |_| Other
         Comments:______________________________________________________________
         _______________________________________________________________________

o        Development platform:
         |_| i-Canvas  |_| MacroMedia Flash   |_| Other   |_| Not applicable
         Comments:______________________________________________________________
         _______________________________________________________________________

______________________
(1) If "Repurpose" is selected existing content (text, media and graphics) will
be used to the maximum degree possible. If "Rewrite/Produce New" is selected,
substantial portions of the existing content will be written or produced anew.

EDT Learning, Inc.                 Page 1 of 3        Version. 4.0, June 1, 2002
<PAGE>

o        Delivery platform:
         |_| EDT LMS (specify)   |_| Docent (specify version)
         |_| Other LMS (specify below)   |_| Not applicable
         Comments:______________________________________________________________
         _______________________________________________________________________

ASSUMPTIONS:

TIMING OR SPECIAL ISSUES:

A general timeline has been indicated and will be considered until otherwise
indicated by Customer:

         o        Execution of this agreement is dependant on __________________
         o        Estimated project kickoff is______________
         o        Estimated course delivery date is_____________
         o        Other significant milestone dates (estimated):
                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                  Comments: ____________________________________________________
                  ______________________________________________________________

<TABLE>
<S>     <C>
LOCATION WHERE SERVICES WILL BE PERFORMED:

       Interactive Alchemy's offices in Arizona.

  -----------------------------------------------------------------------------------------------------------------------------
    FEES & CHARGES:
  -----------------------------------------------------------------------------------------------------------------------------
    DELIVERABLES                              DETAILS                                       UNIT PRICE        EXTENDED PRICE
  -----------------------------------------------------------------------------------------------------------------------------

  -----------------------------------------------------------------------------------------------------------------------------

  -----------------------------------------------------------------------------------------------------------------------------

  -----------------------------------------------------------------------------------------------------------------------------

  -----------------------------------------------------------------------------------------------------------------------------

  -----------------------------------------------------------------------------------------------------------------------------
                                                                                             Sub-Total:
  -----------------------------------------------------------------------------------------------------------------------------
                                                                                     Sales & Use Taxes:
  -----------------------------------------------------------------------------------------------------------------------------
                                                                                             TOTAL DUE:
  -----------------------------------------------------------------------------------------------------------------------------
    EXPENSES REIMBURSEMENT:                   Approved Travel expenses, if any reimbursed by Client.
  -----------------------------------------------------------------------------------------------------------------------------

  -----------------------------------------------------------------------------------------------------------------------------
    PAYMENT TERMS: AS DEFINED IN THE AGREEMENT
  -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Please sign where indicated below to acknowledge acceptance of the terms of this
Work Order and provide authorization to begin the project provided herein. This
Work Order may be executed in counterparts and by facsimile, each of which when
so executed, will be deemed an original, and all of which together shall
constitute one and the same instrument.

EDT Learning, Inc.               Page 2 of 3          Version. 4.0, June 1, 2002

<PAGE>

EDT LEARNING, INC                            INTERACTIVE ALCHEMY, INC

Signature: _________________________         Signature:_________________________

Title: _____________________________         Title:_____________________________

Date: ______________________________         Date:______________________________

Tel: (602) 952-1200

Fax: (602) 952-0544

EDT Learning, Inc.              Page 3 of 3           Version. 4.0, June 1, 2002
<PAGE>

                                   EXHIBIT "B"

                       CONTRACTOR'S STANDARD HOURLY RATES
                       ----------------------------------

THE FOLLOWING ATTACHMENT WILL BE THE BASIS FOR ANY WORK PERFORMED BY CONTRACTOR
   FOR EDT LEARNING, WITH THE ACTUAL HOURS AND RATES VARYING FROM PROJECT TO
     PROJECT AS NEEDED AND REFLECTED IN THE APPROPRIATE STATEMENT OF WORK.

             [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

SUBCONTRACTOR AGREEMENT                                            PAGE 17 OF 18
<PAGE>

                                  CUSTOM TIERS

                                  TIER 1       TIER 2      TIER 3
INTERFACE
BRANDING                          LOGO ONLY    Custom      Custom
GRAPHICAL MENUS                   NO           YES         YES

NAVIGATION
LINEAR                            YES          YES         YES
NON-LINEAR                        NO           YES         YES

MEDIA
STATIC GRAPHICS
  2-D                             UPTO8        UP TO 8     UP TO 12
  3-D                             NO           UP TO 2     UP TO 4
ANIMATED GRAPHICS
  2-D                             NO           UP TO 2     UP TO 4
  3-D                             NO           NO          UP TO 2
TOTAL GRAPHICS                    UP TO 8      UP TO 12    UP TO 20

FLASH ELEMENTS                    NO           YES         YES

AUDIO                             YES          YES         YES
VIDEO                             NO           Add'l Chg   Add'l Chg

PRESENTATION & INTERACTIVITY
ROLLOVERS                         UP TO 2      UP TO 4      UP TO 8
POPUPS                            UP TO 2      UP TO 4      UP TO 8

TIMED BULLETS                     NO           UP TO 4      UP TO 8
TIMED HIGHLIGHTING                NO           UP TO 4      UP TO 8

REMEDIATION                       Yes          Yes          Yes

INSTRUCTIONAL TECHNIQUES
PRESENTATION                      Yes          Yes          Yes
DEMONSTRATION                     Yes          Yes          Yes
PRACTICE                          Yes          Yes          Yes
SOFTWARE SIMULATIONS              Yes          Yes          Yes
SCENARIOS/CASE STUDIES            NO           UP TO 2      UP TO 4

<PAGE>

<TABLE>
<S>     <C>

                                                              Pricing

STANDARD HOURLY RATE       $120

                                        FIRST HOUR                                        ADDITIONAL HOURS (SAME PROJECT)
                                      STARTING POINT                                            STARTING POINT

TIER 1                     OLT          SPT         ILT       NO EXISTING            OLT          SPT          ILT     NO EXISTING
  REPURPOSE               $9,000      $11,250       n/a           n/a               $7,200       $9,000        n/a         n/a
  REWRITE                $11,250      $14,063     $16,875       $22,500             $9,000      $11,250      $13,500     $18,000

TIER 2                     OLT          SPT         ILT       NO EXISTING            OLT          SPT          ILT     NO EXISTING
  REPURPOSE              $13,800      $17,250       n/a           n/a              $11,040      $13,800        n/a         n/a
  REWRITE                $17,250      $21,563     $25,875       $34,500            $13,800      $17,250      $20,700     $27,600

TIER 3                     OLT          SPT         ILT       NO EXISTING            OLT          SPT          ILT     NO EXISTING
  REPURPOSE              $18,600      $23,250       n/a           n/a              $14,880      $18,600        n/a         n/a
  REWRITE                $23,250      $29,063     $34,875       $46,500            $18,600      $23,250      $27,900     $37,200

        DEFINITIONS
                   OLT Customer has existing on-line, web based training that will provide the basis for the course
                   SPT Customer has existing self-paced, computer-based training that will provide the basis for the course
                   ILT Customer has existing instructor-led training that will provide the basis for the course
           NO EXISTING Customer does not have a current course, but will provide us with the content in another form

             REPURPOSE The new web-based course will be produced by adapting the existing content, sticking closely to the original
               REWRITE The new web-based course will be produced by significantly re-writing the current course or material

EDT CONFIDENTIAL                                                5/13/2003                                                     Page 1
</TABLE>
<PAGE>

                                   EXHIBIT "C"
                                   -----------

                                  CHANGE ORDER

Change Order No._________________________________entered into pursuant to the
Subcontractor Agreement dated May 1, 2003 by and between EDT Learning, Inc. and
Contractor ("Contractor ") and the Statement of Work or Statement of Work
executed on_____________________________pertaining to_____________________

1. Describe changes, modifications, or additions to the services.

2. Necessity, availability and assignment of requisite EDT personnel and/or
resources to make requested modifications or additions.

3. Impact on Costs, Performance Period, and other requirements.

       a.     Changes in Costs:

       b.     Changes in Performance Period:

       c.     Changes to any other requirements:

4. Describe any revisions in acceptance test procedures.

____________________________________     _______________________________________
Signature of Contractor                  Date

____________________________________     _______________________________________
Signature of EDT Learning, Inc.          Date

SUBCONTRACTOR AGREEMENT                                            PAGE 18 OF 18
<PAGE>

ILINC
COMMUNICATIONS

                      AMENDMENT TO SUBCONTRACTOR AGREEMENT

       This amendment to subcontractor agreement (the "Amendment") is made to be
effective on April 1, 2004 (the "Effective Date") by and between iLinc
Communications, Inc. (formerly known as EDT Learning, Inc.) ("iLinc
Communications"), a Delaware corporation and Interactive Alchemy, Inc.
("Contractor").

       WHEREAS, iLinc Communications and Contractor entered into a subcontractor
agreement dated May 1, 2003 (the "Agreement") whereby Contractor provides
e-Learning custom content development and professional services to iLinc
Communications and indirectly to iLinc Communications' Customers using among
other things iLinc Communications' Development Software;

       WHEREAS, iLinc Communications and Contractor wish to modify that
Agreement;

       NOW, THEREFORE, iLinc Communications and Contractor, in exchange for the
mutual promises and conditions contained herein and other good and valuable
consideration the sufficiency of which is hereby acknowledged, do agree as
follows:

       1. Section 19(e) of the Agreement "Assignment" shall be amended and
replaced in its entirety to read as follows:

       "19(e) ASSIGNMENT. Contractor may not assign this Agreement, whether by
       operation of law or otherwise, without the prior written consent of iLinc
       Communications, however, such approval of cannot be unreasonably withheld
       or delayed. The rights and obligations of iLinc Communications hereunder
       may be assigned to an iLinc Communications affiliate, or to an individual
       or entity that acquires all or substantially all of the assets or shares
       of iLinc Communications, or with whom iLinc Communications merges. This
       Agreement will bind and inure to the benefit of each party's permitted
       successors and assigns."

       2. The Agreement shall be hereby amended to reflect the foregoing
agreement of the Parties on and after the Effective Date, and except as amended
hereby and any other preceding amendments, the Agreement shall remain otherwise
unchanged.

       Executed as indicated below to be effective as indicated on the first
date written above.

    Interactive Alchemy, Inc.                    iLinc Co munications, Inc.

By: /s/ Donald C. Pierson                    By: /s/ James M. Powers
    ---------------------------------            -------------------------------
    Donald C. Pierson, III, President            James M. Powers, Jr., President
Date: 4/22/04                                Date: 4/22/04

AMENDMENT TO SUBCONTRACTOR AGREEMENT                                 PAGE 1 OF 1
<PAGE>

                   Amendment No. 2 to Sub-Contractor Agreement
                                     Between
                           iLinc Communications, Inc.
                                       and
                            Interactive Alchemy, Inc.

       This second amendment (the "Amendment") to that sub-contractor agreement
dated May 1, 2003 (the "Agreement"), (together with and as amended by the first
amendment dated April 1, 2004) by and between iLinc Communications, Inc.
(formerly EDT Learning, Inc.), a Delaware corporation (the "iLinc"), and
Interactive Alchemy, Inc. ("Contractor").

       Whereas, iLinc wishes to continue to provide custom content development
services to its customers while fostering the business opportunity of
Interactive Alchemy; and

       Whereas, Contractor wishes to continue to provide outsourced custom
content services to iLinc's customers while it continues to build its own custom
content business to its own Contractor customers pursuant to the existing
Sub-contractor Agreement; and,

       Now Therefore, in exchange for the mutual promises contained in the
Agreement and herein, iLinc and Contractor agree as follows:

       1.     This amendment shall be effective on April 29, 2006 (the
              "Amendment's Effective Date"), and all capitalized terms not
              defined herein shall have the meaning given them in the Agreement

       2.     Section 18 titled Term and Termination of the Agreement shall be
              modified so that the Initial Term of the Agreement shall be
              extended for an additional twenty- four (24) months (with the
              modified Initial Term being a total of sixty (60) months from the
              effective date of the Agreement) and, unless earlier terminated
              pursuant to Section 18, the Agreement shall expire on its own
              terms on May 1, 2008.

       3.     Beginning on May 1, 2006, iLinc will no longer be responsible for
              providing the full range of Executive Suite Services that are
              described in the Agreement and not as part and parcel of payment
              of Contractor Fees. Therefore, from May 1, 2006 until July 15,
              2006 Contractor will remain in the Premises while other facilities
              are being prepared by Contractor (the "Occupancy Period") and
              during the Occupancy Period Contractor will pay to iLinc a rental
              fee in the fixed and determined amount of $11,140 per month (the
              "Rent"), (with a prorated amount per day for any partial month).
              The so-called Rent payment will be due on the first day of each
              month that the Contractor remains in the Premises beginning May 1,
              2006 and will be specifically for: use of the premises (including
              CAM and taxes), office equipment, office furniture, telephone
              (excluding long distance and audio conferencing), and parking;
              but, will not be for office supplies, regular and express mail,
              coffee and water, and all other "services" not listed above.
              Finally, on or after July 15, 2006, Contractor will vacate the
              Premises (Suite 620), and Contractor thereafter will no longer pay
              Rent (unless held over after July 15, 2006 in which case Rent will
              continue until the Premises are vacated), and iLinc will no longer
              be responsible for providing, Premises, or the Executive Suite
              Services to Contractor. By way of clarification, after July 15,
              2006, Contractor will be responsible for obtaining its own
              premises, parking, office

Amendment No. 2 to Sub-Contractor Agreement                          Page 1 of 3
<PAGE>

              supplies, internet connectivity, IT staffing, computers, office
              equipment, and telephone systems.

       4.     Beginning on May 1, 2006 and during the first twelve (12) months
              of this Amendment, the Percentage that will be paid to Contractor
              for work performed by Contactor under Section 9(b) shall be
              increased to 90% of the Net Fee. During the second twelve (12)
              months of this Amendment, the Percentage that will be paid to
              Contractor for work performed by Contactor under Section 9(b)
              shall be decreased to 87.5% of the Net Fee, (with the amount being
              retained by iLinc during year one and year two being called the
              "iLinc Retained Portion"). Furthermore, the amount due to iLinc
              from Contractor for work performed on Contractor's Client under
              Section 7 (see inset table) shall be stricken. Instead, in
              consideration for access to iLinc's Development Software,
              Derivative Works and the continued relationship as iLinc's custom
              content supplier, Contractor agrees to pay a fee equal to ten
              percent (10%) of all Contractor's sales from work performed on
              Contractor's Clients during the first twelve (12) months of this
              Amendment; and, a fee equal to twelve and one half percent (12.5%)
              of all Contractor's sales from work performed on Contractor's
              Clients during the second twelve (12) months of this Amendment
              (with the amount paid by Contractor called the "Royalty Fee").
              Notwithstanding the foregoing, in no event, during the first
              twelve (12) months of this Amendment, shall the total of the iLinc
              Retained Portion and the Royalty Fee together exceed two hundred
              thousand dollars ($200,000) (i.e., as an annual maximum); and in
              no event, during the second twelve (12) months of this Amendment,
              shall the total of the iLinc Retained Portion and the Royalty Fee
              together exceed four hundred fifty thousand dollars ($450,000), so
              that during the two year term of this Amendment, the total of the
              iLinc Retained Portion and the Royalty Fee shall not exceed a
              total of six hundred and fifty thousand dollars ($650,000). To
              assure that cash collections are acknowledged and payments made on
              a timely basis by both parties, when a payment is received from an
              iLinc Customer or a Contractor Client, then evidence of the
              receipt of payment (e.g. a copy of the check or wire transfer
              documentation) shall be delivered to the other party within 24
              hours of receipt and payment of the corresponding amount due to
              Contractor or the Royalty Fee shall be delivered within
              seventy-two (72) hours of receipt of payment.

       5.     At the end of the amended Initial Term and upon termination of the
              Agreement, then the covenants of Section 8(a)(ii) and 8(a)(iii)
              are terminated without further effect; but provided for clarity
              Section 8(a)(i) and Section 8(a)(iv) shall remain unchanged and in
              full affect notwithstanding termination of the Agreement, provided
              further that Sue Leff shall be considered an employee of both
              Contractor and iLinc for purposes of Section 8(a)(i). Furthermore,
              at the end of the amended Initial Term and upon termination of the
              Agreement then the license granted in Section 6 to the Development
              Software (e.g. i-Canvas software) shall continue on a perpetual
              basis from the termination date of the Agreement but the internal
              use license for all other software (e.g. LearnLinc software) shall
              terminate.

Amendment No. 2 to Sub-Contractor Agreement                          Page 2 of 3
<PAGE>

       6.     Conflicts between the provisions of this Amendment and the
              Agreement shall be resolved in favor of the spirit, intent, terms
              and provision of this Amendment. All other provisions not directly
              modified by this Amendment contained within the Agreement shall
              remain unchanged and in full force and effect.

iLinc Communications, Inc.                   Interactive Alchemy, Inc.:

By: /s/ James M. Powers                      By: /s/ Don Pierson
    ---------------------------------            -------------------------------
    James M. Powers, Jr.,                        Don Pierson,
    President                                    President
Date: 5/5/06                                 Date: 5/5/06

Amendment No. 2 to Sub-Contractor Agreement                          Page 3 of 3

<PAGE>

                        Amendment to Contractor Agreement
                                     between
                           iLinc Communications, Inc.
                                       and
                            Interactive Alchemy, Inc.

       This third amendment (the "Agreement") is to be effective on September
28, 2007 (the "Effective Date"), and is between iLinc Communications, Inc., a
Delaware corporation ("iLinc"), and Interactive Alchemy, Inc. ("Contractor").

       Whereas, Contractor did execute that certain sub-contractor agreement
dated May 1, 2003, (together with and as amended by the first amendment dated
April 1, 2004 and second amendment dated May 5, 2006) (all together the "Custom
Content Agreement"), a copy of which is attached as Exhibit "A";

       Whereas, iLinc wishes to continue to provide custom content development
services to its customers while fostering the business opportunity of Contractor
through the term of the Agreement; and

       Now Therefore, in exchange for the mutual promises contained in the
Agreement and herein, iLinc and Contractor agree as follows:

       1.     All capitalized terms not defined herein shall have the meaning
              given them in the Custom Content Agreement.

       2.     Beginning on the Effective Date, and during the remainder of the
              term of the Custom Content Agreement:

              a.     the Percentage that will be paid to Contractor for work
                     performed by Contactor under Section 9(b) shall be
                     increased to 95% of iLinc's collected revenue;

              b.     Contractor shall not owe a fee to iLinc from work performed
                     on Contractor's Clients (the so-called "Royalty Fee");

              c.     At the end of the Amended Initial Term and upon termination
                     by expiration of the Agreement (but not if terminated by
                     the parties by assertion of a material breach that is
                     adjudicated by an arbitrator as uncured):
                     i.     All compensation whether in the form of fees or
                            otherwise accrued but unpaid between the parties
                            shall be fully paid and shall no longer accrue;
                     ii.    All Statements of Work outstanding and uncompleted
                            at the termination date will be irrevocably assigned
                            by iLinc to Contractor, and all cash deposits
                            associated with those outstanding Statements of Work
                            will be transmitted to Contractor, if any, and all
                            such outstanding and assigned Statements of Work
                            will thereafter be completed by Contractor;
                     iii.   Because Contractor will be responsible for
                            completion of those outstanding Statements of Work,
                            Contractor will indemnify and hold harmless iLinc,
                            for the three (3) year period beginning with the
                            termination date, for claims that arise on and after
                            the termination

Third Amendment to Contractor Agreement                              Page 1 of 2
<PAGE>

                            date against iLinc by and of iLinc's Customers
                            arising from any custom content services that had
                            been provided at any time by Contractor; and,
                     iv.    iLinc covenants that, for the three (3) year period
                            beginning with the termination date, it will not
                            compete with Contractor in the custom content
                            development business, specifically concerning custom
                            content development business of United Airlines;
                            provided however for clarity that nothing herein
                            shall prohibit iLinc from offering any other service
                            or product other than custom content development
                            services to any person or entity, including United
                            Airlines.
                     v.     The parties will execute a mutual release and
                            indemnity from any and all claims arising from the
                            Custom Content Agreement upon termination of the
                            Custom Content Agreement.

              d.     Provided further that Sue Leff shall be permitted to be
                     employed by Contractor and Contractor shall be responsible
                     for all compensation due to Ms. Leff, whether base salary
                     or commission, but not any Agent commission due upon United
                     hosting.

       3.     Conflicts between the provisions of this Amendment and the Custom
              Content Agreement (and any Amendment thereto) shall be resolved in
              favor of the spirit, intent, terms and provision of this
              Agreement. All other provisions not directly modified by this
              Amendment contained within the Agreement (and any amendment) shall
              remain unchanged and in full force and effect.

iLinc Communications, Inc.

By: /s/ James M. Powers
    ---------------------------------
    James M. Powers, Jr.,
    President
Date: 9/28/07

Interactive Alchemy, Inc.:

By: /s/ Don Pierson
    -------------------------------
    Don Pierson,
    President
Date: 9/28/07

Third Amendment to Contractor Agreement                             Page 2 of 2<PAGE>

                                                                    Exhibit 10.1

                   REORGANIZATION AND STOCK PURCHASE AGREEMENT

       This REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of October 24,
2007 (this "Agreement") is by and between Palomine Mining Inc., a Nevada
corporation ("Palomine"), Universal Bioenergy North America, Inc., a Nevada
corporation ("UBNA"); Mortensen Financial Limited, a Belizean corporation
("Mortensen"); and the stockholders and owners of all of the issued and
outstanding equity of UBNA as set forth on Schedule 1(a) to this Agreement
(collectively, jointly and severally, the "Shareholders")

RECITALS

       A.     WHEREAS, Palomine desires to acquire directly or indirectly 100%
              of the equity of UBNA;

       B.     WHEREAS, the Shareholders desire to exchange with Palomine all of
              the issued and outstanding common stock of UBNA for 2,000,000
              shares of common stock of Palomine and thus transfer UBNA to
              Palomine;

       C.     WHEREAS, Mortensen is a shareholder of Palomine and owns 2,000,000
              shares of Palomine or approximately 46% of the issued and
              outstanding common stock of Palomine;

       D.     WHEREAS, Mortensen desires to effect the transactions contemplated
              by this Agreement and in order to induce the transactions;
              Mortensen will contribute 1,800,000 shares of common stock that he
              currently owns to the amount of shares being delivered to the
              Shareholders hereunder;

       E:     WHEREAS, the parties hereto intend that the transaction
              contemplated hereby shall be completed as a tax-free exchange of
              stock.

NOW, THEREFORE, the Shareholders and the respective Boards of Directors of
Palomine and UBNA deem it advisable and in the best interests of their
corporations and the respective shareholders of their corporations that Palomine
acquire 100% of the securities of UBNA, in accordance with the terms and
conditions of this Reorganization and Stock Purchase Agreement.

       1.     PRE-CLOSING ACTIONS OF PALOMINE AND MORTENSEN. Immediately upon
              execution of this Agreement and prior to any Closing as set forth
              herein, Palomine (and Mortensen with respect to item b) shall
              undertake the following actions:

              (a)    The Board of Directors of Palomine shall unanimously
                     approve and shall deliver or cause to be delivered to Cohen
                     & Czarnik LLP ("Escrow Agent") to be placed in escrow
                     ("Escrow") resolutions with respect to (a) approving all of
                     the transactions set forth herein; (b) increasing or
                     directing the size of the Board of Directors to be two
                     members; (c) electing two persons to the board of directors
                     of Palomine designated by UBNA, and (d) approving a name
                     change of the corporation to "Universal Bioenergy, Inc."
                     (the "Palomine Board Resolutions").

<PAGE>

              (b)    Palomine and Mortensen, jointly and severally, shall
                     deliver or cause to be delivered to Escrow Agent to be
                     placed in Escrow a total of 2,000,000 shares of Palomine
                     (200,000 shares directly from Palomine and 1,800,000 shares
                     directly from Mortensen) for delivery to Shareholders (as
                     set forth on Schedule 1(a) attached hereto) (the "Escrowed
                     Palomine Shares").

              (c)    Palomine shall use its reasonable best efforts to prepare
                     and complete the documents necessary to be filed with
                     local, state and federal authorities to consummate the
                     transactions contemplated hereby including the filing of
                     any necessary reports pursuant to the Securities Exchange
                     Act of 1934, as amended.

       2.     PRE-CLOSING ACTION OF UBNA. Immediately upon execution of this
              Agreement and prior to the Closing as set forth herein, UBNA shall
              undertake the following actions:

              (a)    The Board of Directors of UBNA shall execute and deliver
                     resolutions unanimously approving all of the transactions
                     set forth herein.

              (b)    The shareholders of UBNA shall deliver to Escrow Agent to
                     be placed in Escrow certificates representing 5,000 shares
                     of common stock of UBNA (the "Escrowed UBNA Shares"),
                     representing 100% of the issued and outstanding equity of
                     UBNA, for delivery to Palomine at Closing.

              (c)    During the Due Diligence Period, UBNA shall make available
                     to Palomine and Palomine's employees, attorneys,
                     accountants, financial advisors, agents and representatives
                     during normal business hours all information concerning the
                     operation, business and prospects of UBNA as may be
                     reasonably requested by Palomine. UBNA will cooperate with
                     Palomine for the purpose of permitting Palomine to discuss
                     UBNA's business and prospects with customers, creditors,
                     suppliers and other persons having business dealings with
                     such party, including without limitation providing access
                     to all employees, consultants, assets, properties, books,
                     accounts, records, tax returns, contracts and other
                     documents of UBNA, provided that such access will not
                     materially interfere with the normal business operations of
                     UBNA.

       3.     CONDITIONS TO CLOSING

       The parties' obligation to close the proposed Acquisition will be subject
       to specified conditions precedent including, but not limited to, the
       following:

       (a)    the representations and warranties of Palomine as set forth in
              Section 6 herein shall remain accurate as of the Closing Date and
              no material adverse change to the financial condition of Palomine
              shall have occurred;

       (b)    the representations and warranties of UBNA as set forth in Section
              7 herein shall remain accurate as of the Closing Date and no
              material adverse change in the business or financial condition of
              UBNA shall have occurred;

       (c)    all the documents necessary to be filed with local, state and
              federal authorities are prepared;

<PAGE>

       (d)    Palomine shall have provided the board resolutions and any other
              approval required to complete the board election; and board
              resolutions approving the name change;.

       (e)    Palomine shall retain its good standing as a publicly traded
              company, trading on the over-the-counter bulletin board under the
              symbol "POMM.OB";

       (f)    Palomine shall have prepared and delivered to UBNA within thirty
              (30) days of Closing audited and unaudited financial statements
              which if filed at the time received would be complete and
              compliant with Regulation S-X, Section 310, sufficient for the
              combined entities to file any and all filings required by the US
              Securities and Exchange Commission and U.S. securities laws and
              rules (the "Palomine Financial Statements"); and

       (g)    UBNA shall have prepared and delivered to Palomine within five (5)
              days of closing audited and unaudited financial statements which
              if filed at the time received would be complete and compliant with
              Regulation S-X, Section 310, sufficient for the combined entities
              to file any and all filings required by the US Securities and
              Exchange Commission and U.S. securities laws and rules (the "UBNA
              Financial Statements").

       4.     AT THE CLOSING.

       (a)    At the Closing, Escrow Agent shall release from Escrow the
              Palomine Board Resolutions effectuating the election of members
              designated by UBNA to the Palomine Board of Directors. The members
              of the Board of Directors of Palomine prior to Closing shall
              submit resignations at Closing.

       (b)    At the Closing, Escrow Agent shall release from Escrow the
              Escrowed Palomine Shares to the Shareholders.

       (c)    At the Closing, Escrow Agent shall release from Escrow the
              Escrowed UBNA Shares to Palomine.

       (d)    At the Closing, the existing officers of Palomine shall resign and
              be replaced by those officers appointed by the new Board of
              Directors.

       5.     TIMING OF CLOSING. The Closing shall occur upon the satisfaction
              of the conditions set forth in this Agreement and upon
              instructions from the parties hereto to the Escrow Agent. The
              Closing Date shall occur on or before November 30th, 2007 in the
              event such conditions are met, unless the Escrow Agent receives
              instructions otherwise from the parties or notice from a party
              that the conditions set forth herein have not occurred. Unless
              otherwise advised in writing by the parties, in the event the
              Closing does not occur on or before December 31, 2007, (i) the
              Escrow Agent shall return the Escrowed Palomine Shares and the
              Palomine Board Resolutions to Palomine; and (ii) the Escrow Agent
              shall return the Escrowed UBNA Shares to the shareholders of UBNA.

       6.     REPRESENTATIONS OF PALOMINE/MORTENSEN. Palomine (and Mortensen
              solely with respect to his shares of common stock of Palomine
              contributed to the Escrowed Palomine Shares) represents and
              warrants as follows:

<PAGE>

       (a)    OWNERSHIP OF SHARES. As of the Closing Date, the shareholders of
              UBNA will become the owners of the Escrowed Palomine Shares. The
              Escrowed Palomine Shares will be free from claims, liens or other
              encumbrances, except as provided under applicable federal and
              state securities laws;

       (b)    FULLY PAID AND NONASSESSABLE. The Escrowed Palomine Shares
              constitute duly and validly issued shares of Palomine, and are
              fully paid and nonassessable, and Palomine further represents that
              it has the power and the authority to execute this Agreement and
              to perform the obligations contemplated hereby;

       (c)    ORGANIZATION OF PALOMINE; AUTHORIZATION. Palomine is a corporation
              duly organized, validly existing and in good standing under the
              laws of Nevada with full corporate power and authority to execute
              and deliver this Agreement and to perform its obligations
              hereunder. The execution, delivery and performance of this
              Agreement have been duly authorized by all necessary corporate
              action of Palomine and this Agreement constitutes a valid and
              binding obligation of Palomine; enforceable against it in
              accordance with its terms.

       (d)    CAPITALIZATION. The authorized capital stock of Palomine consists
              of 75,000,000 shares of common stock, par value $0.001 per share,
              and no shares of preferred stock. As of the Closing Date, Palomine
              will have a total of no more than 4,600,000 shares of common stock
              issued and outstanding and no shares of preferred stock issued and
              outstanding. As of the Closing Date, all of the issued and
              outstanding shares of common stock of Palomine are validly issued,
              fully paid and non-assessable. There is not and as of the Closing
              Date, there will not be outstanding any warrants, options or other
              agreements on the part of Palomine obligating Palomine to issue
              any additional shares of common or preferred stock or any of its
              securities of any kind. Palomine will not issue any shares of
              capital stock from the date of this Agreement through the Closing
              Date. The Common Stock of Palomine is presently trading on the
              over-the-counter electronic bulletin board under the symbol
              "POMM.OB".

       (e)    OWNERSHIP OF PALOMINE SHARES. The delivery of certificates
              provided herein for the Escrowed Palomine Shares will result in
              the shareholders of UBNA immediate acquisition of record and
              beneficial ownership of the Escrowed Palomine Shares, free and
              clear of all encumbrances.

       (e)    NO CONFLICT AS TO PALOMINE. Neither the execution and delivery of
              this Agreement nor the consummation of the exchange of the
              Palomine Shares will (a) violate any provision of the certificate
              of incorporation or by-laws (or other governing instrument) of
              Palomine or (b) violate, or be in conflict with, or constitute a
              default (or an event which, with notice or lapse of time or both,
              would constitute a default) under, or result in the termination
              of, or accelerate the performance required by, or excuse
              performance by any Person of any of its obligations under, or
              cause the acceleration of the maturity of any debt or obligation
              pursuant to, or result in the creation or imposition of any
              encumbrance upon any property or assets of Palomine under, any
              material agreement or commitment to which Palomine is a party or
              by which its property or assets is bound, or to which any of the
              property or assets of Palomine is subject, or (c) violate any
              statute or law or any judgment, decree, order, regulation or rule
              of any court or other governmental body applicable to Palomine
              except, in the case of violations, conflicts, defaults,
              terminations, accelerations or encumbrances described in clause
              (b) of this Section for such matters which are not likely to have
              a material adverse effect on the business or financial condition
              of Palomine.

<PAGE>

       (f)    CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
              approval or authorization of, or declaration, filing or
              registration with, any Governmental Body is required to be made or
              obtained by Palomine in connection with the execution, delivery
              and performance of this Agreement by Palomine or the consummation
              of the sale of the Escrowed Palomine Shares.

       (g)    OTHER CONSENTS. Except for consents from the holders of the
              Escrowed Palomine Shares, no consent of any Person is required to
              be obtained by Palomine to the execution, delivery and performance
              of this Agreement or the consummation of the sale of the Palomine
              Shares, including, but not limited to, consents from parties to
              leases or other agreements or commitments, except for any consent
              which the failure to obtain would not be likely to have a material
              adverse effect on the business and financial condition of
              Palomine.

       (h)    LITIGATION. There is no action, suit, inquiry, proceeding or
              investigation by or before any Court or Governmental body pending
              or threatened in writing against or involving Palomine which is
              likely to have a material adverse effect on the business or
              financial condition of Palomine, or which questions or challenges
              the validity of this Agreement. Palomine is not subject to any
              judgment, order or decree that is likely to have a material
              adverse effect on the business or financial condition of Palomine.

       (i)    SEC REPORTS. Palomine has filed with the SEC all forms, reports,
              schedules, and statements that were required to be filed by it
              with the SEC within the three (3) year period ending on the
              Closing, and previously has furnished or made available to the
              Company accurate and complete copies of all the SEC Documents. As
              of their respective dates, the SEC Documents were prepared in
              accordance with the Securities Exchange Act of 1934, as amended
              (the "Exchange Act") and the Securities Act of 1933, as amended
              (the "Securities Act") and did not contain any untrue statement of
              a material fact or omit to state a material fact required to be
              stated in those documents or necessary to make the statements in
              those documents not misleading, in light of the circumstances
              under which they were made. As of their respective dates, these
              reports and statements will not contain any untrue statement of a
              material fact or omit to state a material fact required to be
              stated in them or necessary to make the statements in them not
              misleading, in light of the circumstances under which they are
              made and these reports and statements will comply in all material
              respects with all applicable requirements of the Exchange Act and
              the Securities Act. "SEC Documents" means all forms, notices,
              reports, schedules, statements, and other documents filed by
              Parent with the SEC within the three years from the Closing,
              whether or not constituting a "filed" document, and includes all
              proxy statements, registration statements, amendments to
              registration statements, periodic reports on Forms 10-KSB, 10-QSB,
              and 8-K, and annual and quarterly reports to shareholders.

<PAGE>

       (j)    FINANCIAL STATEMENTS. The audited consolidated financial
              statements and unaudited consolidated interim financial statements
              of Palomine that are included or incorporated in the SEC Documents
              were prepared in accordance with GAAP applied on a consistent
              basis during the periods involved (except as otherwise indicated
              in the notes to them) and fairly present the consolidated
              financial position, results of operations, and cash flows from
              operating, investing, and financing activities of Palomine as of
              the dates and for the periods indicated, except that the unaudited
              consolidated interim financial statements in the SEC Documents are
              subject to normal year-end adjustments and were prepared in
              accordance with the instructions to SEC Form 10-QSB and,
              accordingly, omit or condense certain footnotes and other
              information normally included in financial statements prepared in
              accordance with GAAP. The consolidated financial statements of
              Palomine that are included or incorporated in any subsequent
              report or statement that Palomine mails to its shareholders
              generally or files with the SEC during the period after the date
              of this Agreement and before the Closing Date will be prepared in
              accordance with GAAP applied on a consistent basis during the
              periods involved (except as otherwise indicated in them, the notes
              to them, or any related report of Palomine's independent
              accountants) and will fairly present the financial information
              that they purport to present, except that the unaudited,
              consolidated interim financial statements will be subject to
              normal year-end adjustments and will omit or condense certain
              footnotes and other information normally included in financial
              statements prepared in accordance with GAAP.

       (k)    ABSENCE OF CERTAIN CHANGES. From December 31, 2006, to the date
              hereof, Palomine has not :

              1.     suffered damage or destruction of any of its properties or
                     assets (whether or not covered by insurance) which is
                     materially adverse to the financial condition of Palomine,
                     or made any disposition of any of its material properties
                     or assets other than in the ordinary course of business;

              2.     made any change or amendment in its certificate of
                     incorporation or by-laws, or other governing instruments,
                     except as contemplated hereby or required to effect the
                     transactions set forth herein;

              3.     other than the Palomine Escrowed Shares or other than the
                     total issued and outstanding shares set forth in paragraph
                     6(d) hereto, issued or sold any Equity Securities or other
                     securities, acquired, directly or indirectly, by redemption
                     or otherwise, any such Equity Securities, reclassified,
                     split-up or otherwise changed any such Equity Security, or
                     granted or entered into any options, warrants, calls or
                     commitments of any kind with respect thereto;

              4.     organized any new Subsidiary or acquired any Equity
                     Securities of any Person or any equity or ownership
                     interest in any business;

              5.     borrowed any funds or incurred, or assumed or become
                     subject to, whether directly or by way of guarantee or
                     otherwise, any obligation or liability with respect to any
                     such indebtedness for borrowed money except to Mortensen;

              6.     paid, discharged or satisfied any material claim, liability
                     or obligation (absolute, accrued, contingent or otherwise),
                     other than in the ordinary course of business;

              7.     prepaid any material obligation having a maturity of more
                     than 90 days from the date such obligation was issued or
                     incurred;

              8.     cancelled any material debts or waived any material claims
                     or rights, except in the ordinary course of business;

              9.     disposed of or permitted to lapse any rights to the use of
                     any material patent or registered trademark or copyright or
                     other intellectual property owned or used by it;

              9.     granted any general increase in the compensation of
                     officers or employees (including any such increase pursuant
                     to any employee benefit plan), except to Frank H. Ward;

<PAGE>

              10.    purchased or entered into any contract or commitment to
                     purchase any material quantity of raw materials or
                     supplies, or sold or entered into any contract or
                     commitment to sell any material quantity of property or
                     assets;

              11.    made any capital expenditures or additions to property,
                     plant or equipment or acquired any other property or
                     assets;

              12.    written off or been required to write off any notes or
                     accounts receivable;

              13.    written down or been required to write down any inventory;
                     or

              14.    entered into any collective bargaining or union contract or
                     agreement.

              15.    incurred any liability in excess of $20,000.

         (l)  CONTRACTS AND COMMITMENTS. Palomine is not a party to any:

              1.     Contract or agreement involving any liability on the part
                     of Palomine.

              2.     Lease of personal property;

              3.     Employee bonus, stock option or stock purchase, performance
                     unit, profit-sharing, pension, savings, retirement, health,
                     deferred or incentive compensation, insurance or other
                     material employee benefit plan (as defined in Section 2(3)
                     of ERISA) or program for any of the employees, former
                     employees or retired employees of Palomine;

              4.     Commitment, contract or agreement that is currently
                     expected by the management of Palomine to result in any
                     material loss upon completion or performance thereof;

              5.     Contract, agreement or commitment with any officer,
                     employee, agent, consultant, advisor, salesman, sales
                     representative, value added reseller, distributor or
                     dealer; or

              6.     Employment agreement or other similar agreement.

       (m)    COMPLIANCE WITH LAW. The operations of Palomine have been
              conducted in accordance with all applicable laws and regulations
              of all Governmental Bodies having jurisdiction over them, except
              for violations thereof which are not likely to have a material
              adverse effect on the business or financial condition of Palomine.
              Palomine has not received any notification of any asserted present
              or past failure by it to comply with any such applicable laws or
              regulations. Palomine has all material licenses, permits, orders
              or approvals from the Governmental Bodies required for the conduct
              of its business, and is not in material violation of any such
              licenses, permits, orders and approvals. All such licenses,
              permits, orders and approvals are in full force and effect, and no
              suspension or cancellation of any thereof has been threatened.

<PAGE>

       (n)    TAX MATTERS.

              1.     Palomine (1) has filed or shall file prior to Closing all
                     nonconsolidated and noncombined Tax Returns and all
                     consolidated or combined Tax Returns that include only
                     Palomine and not UBNA or its other Affiliates (for the
                     purposes of this Section, such tax Returns shall be
                     considered nonconsolidated and noncombined Tax Returns)
                     required to be filed through the date hereof and will have
                     paid any Tax due through the date hereof with respect to
                     the time periods covered by such nonconsolidated and
                     noncombined Tax Returns and shall timely pay any such Taxes
                     required to be paid by it after the date hereof with
                     respect to such Tax Returns and (2) shall prepare and
                     timely file all such nonconsolidated and noncombined Tax
                     Returns required to be filed after the date hereof and
                     through the Closing Date and pay all Taxes required to be
                     paid by it with respect to the periods covered by such Tax
                     Returns; (B) all such Tax Returns filed pursuant to clause
                     (A) after the date hereof shall, in each case, be prepared
                     and filed in a manner consistent in all material respects
                     (including elections and accounting methods and
                     conventions) with such Tax Return most recently filed in
                     the relevant jurisdiction prior to the date hereof, except
                     as otherwise required by law or regulation. Any such Tax
                     Return filed or required to be filed after the date hereof
                     shall not reflect any new elections or the adoption of any
                     new accounting methods or conventions or other similar
                     items, except to the extent such particular reflection or
                     adoption is required to comply with any law or regulation.

              2.     Palomine represents that prior to Closing, all consolidated
                     or combined Tax Returns (except those described in
                     subparagraph (1) above) required to be filed by any person
                     through the date hereof that are required or permitted to
                     include the income, or reflect the Activities, operations
                     and Transactions, of Palomine for any taxable period shall
                     have been timely filed, and the income, activities,
                     operations and Transactions of Palomine shall have been
                     properly included and reflected thereon. Palomine shall
                     prepare and file, or cause to be prepared and filed, all
                     such consolidated or combined Tax Returns that are required
                     or permitted to include the income, or reflect the
                     activities, operations and Transactions, of Palomine, with
                     respect to any taxable year or the portion thereof ending
                     on or prior to the Closing Date, including, without
                     limitation, Palomine's consolidated federal income tax
                     return for such taxable years. Prior to Closing, Palomine
                     will timely file a consolidated federal income tax return
                     for the taxable year ended December 31, 2006 and such
                     return shall include and reflect the income, activities,
                     operations and Transactions of Palomine for the taxable
                     period then ended, and hereby expressly covenants and
                     agrees to file a consolidated federal income tax return,
                     and to include and reflect thereon the income, activities,
                     operations and Transactions of Palomine for the taxable
                     period through the Closing Date. All Tax Returns filed
                     pursuant to this subparagraph (2) after the date hereof
                     shall, in each case, to the extent that such Tax Returns
                     specifically relate to Palomine and do not generally relate
                     to matters affecting other members of Palomine's
                     consolidated group, be prepared and filed in a manner
                     consistent in all material respects (including elections
                     and accounting methods and conventions) with the Tax Return
                     most recently filed in the relevant jurisdictions prior to
                     the date hereof, except as otherwise required by law or
                     regulation. Palomine has paid or will pay all Taxes that
                     may now or hereafter be due with respect to the taxable
                     periods covered by such consolidated or combined Tax
                     Returns.

<PAGE>

              3.     There is no (nor has there been any request for an)
                     agreement, waiver or consent providing for an extension of
                     time with respect to the assessment of any Taxes
                     attributable to Palomine, or its assets or operations and
                     no power of attorney granted by Palomine with respect to
                     any Tax matter is currently in force.

              4.     There is no action, suit, proceeding, investigation, audit,
                     claim, demand, deficiency or additional assessment in
                     progress, pending or threatened against or with respect to
                     any Tax attributable to Palomine or its assets or
                     operations.

              5.     All amounts required to be withheld as of the Closing Date
                     for Taxes or otherwise have been withheld and paid when due
                     to the appropriate agency or authority.

       (o)    BORROWING AND GUARANTEES. Except as reflected on its financial
              statements for the period ended December 31, 2006, Palomine (a)
              does not have any indebtedness for borrowed money except to
              Mortensen, (b) are not lending or committed to lend any money
              (except for advances to employees in the ordinary course of
              business), and (c) are not guarantors or sureties with respect to
              the obligations of any Person.

7.     Representations of UBNA and Shareholders. UBNA and the Shareholders,
       collectively, jointly and severally, for their respective rights and
       interests represent and warrant as follows:

       (a)    ORGANIZATION; AUTHORIZATION. UBNA is a corporation duly organized,
              validly existing and in good standing under the laws of its
              country of organization with full corporate power and authority to
              execute and deliver this Agreement and to perform its obligations
              hereunder. The execution, delivery and performance of this
              Agreement have been duly authorized by all necessary corporate
              action of UBNA and this Agreement constitutes a valid and binding
              obligation; enforceable against in accordance with its terms. UBNA
              has no subsidiaries.

       (b)    CAPITALIZATION. The authorized capital stock of UBNA consists of
              10,000 shares of common stock, par value $0.01 per share. As of
              the date of this Agreement, UBNA has 5,000 shares of common stock
              issued and outstanding and no shares of preferred stock issued and
              outstanding. No shares have otherwise been registered under state
              or federal securities laws. As of the Closing Date, all of the
              issued and outstanding shares of common stock of UBNA are validly
              issued, fully paid and non-assessable and there is not and as of
              the Closing Date there will not be outstanding any warrants,
              options or other agreements on the part of UBNA obligating any of
              UBNA to issue any additional shares of common or preferred stock
              or any of its securities of any kind. UBNA will not issue any
              shares of capital stock from the date of this Agreement through
              the Closing Date. The Escrowed UBNA Shares will be free from
              claims, liens or other encumbrances, except as provided under
              applicable federal and state securities laws;

       (c)    NO CONFLICT AS TO UBNA. Neither the execution and delivery of this
              Agreement nor the consummation of the transactions contemplated
              herein will (a) violate any provision of the articles of
              incorporation or organization of UBNA; or (b) violate, or be in
              conflict with, or constitute a default (or an event which, with
              notice or lapse of time or both, would constitute a default)
              under, or result in the termination of, or accelerate the
              performance required by, or excuse performance by any Person of
              any of its obligations under, or cause the acceleration of the
              maturity of any debt or obligation pursuant to, or result in the
              creation or imposition of any Encumbrance upon any property or
              assets of UBNA under, any material agreement or commitment to
              which UBNA is a party or by which any of their respective property
              or assets is bound, or to which any of the property or assets of
              any of UBNA is subject, or (c) violate any statute or law or any
              judgment, decree, order, regulation or rule of any court or other
              Governmental Body applicable to UBNA except, in the case of
              violations, conflicts, defaults, terminations, accelerations or
              Encumbrances described in clause (b) of this Section for such
              matters which are not likely to have a material adverse effect on
              the business or financial condition of UBNA, taken as a whole.

<PAGE>

       (d)    CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
              approval or authorization of, or declaration, filing or
              registration with, any Governmental Body is required to be made or
              obtained by UBNA in connection with the execution, delivery and
              performance of this Agreement by UBNA or the consummation of the
              transactions contemplated herein.

       (e)    OTHER CONSENTS. No consent of any Person is required to be
              obtained by UBNA to the execution, delivery and performance of
              this Agreement or the consummation of the transactions
              contemplated herein, including, but not limited to, consents from
              parties to leases or other agreements or commitments, except for
              any consent which the failure to obtain would not be likely to
              have a material adverse effect on the business and financial
              condition of UBNA.

       (f)    BUILDINGS, PLANTS AND EQUIPMENT. The buildings, plants, structures
              and material items of equipment and other personal property owned
              or leased by UBNA are, in all respects material to the business or
              financial condition of UBNA taken as a whole, in good operating
              condition and repair (ordinary wear and tear excepted) and are
              adequate in all such respects for the purposes for which they are
              being used. UBNA has not received notification that it is in
              violation of any applicable building, zoning, anti-pollution,
              health, safety or other law, ordinance or regulation in respect of
              its buildings, plants or structures or their operations, which
              violation is likely to have a material adverse effect on the
              business or financial condition of UBNA taken as a whole or which
              would require a payment by UBNA in excess of $20,000 in the
              aggregate, and which has not been cured.

       (g)    NO CONDEMNATION OR EXPROPRIATION. Neither the whole nor any
              portion of the property or leaseholds owned or held by UBNA is
              subject to any governmental decree or order to be sold or is being
              condemned, expropriated or otherwise taken by any Governmental
              Body or other Person with or without payment of compensation
              therefore, which action is likely to have a material adverse
              effect on the business or financial condition of UBNA, taken as a
              whole.

       (h)    LITIGATION. There is no action, suit, inquiry, proceeding or
              investigation by or before any court or Governmental Body pending
              or threatened in writing against or involving UBNA which is likely
              to have a material adverse effect on the business or financial
              condition of UBNA, taken as whole, or which would require a
              payment by UBNA in excess of $20,000 in the aggregate or which
              questions or challenges the validity of this Agreement. UBNA is
              not subject to any judgment, order or decree that is likely to
              have a material adverse effect on the business or financial
              condition of UBNA, taken as a whole, or which would require a
              payment by UBNA in excess of $20,000 in the aggregate.

       (i)    ABSENCE OF CERTAIN CHANGES. UBNA has not:

              1.     suffered the damage or destruction of any of its properties
                     or assets (whether or not covered by insurance) which is
                     materially adverse to the business or financial condition
                     of UBNA, taken as a whole, or made any disposition of any
                     of its material properties or assets other than in the
                     ordinary course of business;

<PAGE>

              2.     made any change or amendment in its certificate of
                     incorporation or by-laws, or other governing instruments;

              3.     paid, discharged or satisfied any material claim, liability
                     or obligation (absolute, accrued, contingent or otherwise),
                     other than in the ordinary course of business;

              4.     prepaid any material obligation having a maturity of more
                     than 90 days from the date such obligation was issued or
                     incurred;

              5.     cancelled any material debts or waived any material claims
                     or rights, except in the ordinary course of business;

              6.     disposed of or permitted to lapse any rights to the use of
                     any material patent or registered trademark or copyright or
                     other intellectual property owned or used by it;

              7.     granted any general increase in the compensation of
                     officers or employees (including any such increase pursuant
                     to any employee benefit plan);

              8.     purchased or entered into any contract or commitment to
                     purchase any material quantity of raw materials or
                     supplies, or sold or entered into any contract or
                     commitment to sell any material quantity of property or
                     assets, except (i) normal contracts or commitments for the
                     purchase of, and normal purchases of, raw materials or
                     supplies, made in the ordinary course business, (ii) normal
                     contracts or commitments for the sale of, and normal sales
                     of, inventory in the ordinary course of business, and (iii)
                     other contracts, commitments, purchases or sales in the
                     ordinary course of business;

              9.     made any capital expenditures or additions to property,
                     plant or equipment or acquired any other property or assets
                     (other than raw materials and supplies) at a cost in excess
                     of $20,000 in the aggregate;

              10.    written off or been required to write off any notes or
                     accounts receivable in an aggregate amount in excess of
                     $20,000;

              11.    written down or been required to write down any inventory
                     in an aggregate amount in excess of $20,000;

              12.    entered into any collective bargaining or union contract or
                     agreement; or

              13.    other than the ordinary course of business, incurred any
                     liability required by generally accepted accounting
                     principles to be reflected on a balance sheet and material
                     to the business or financial condition of UBNA taken as a
                     whole.

       (j)    LABOR RELATIONS. UBNA is not a party to any collective bargaining
              agreement. Except for any matter which is not likely to have a
              material adverse effect on the business or financial condition of
              UBNA, taken as a whole, (a) UBNA are in compliance with all
              applicable laws respecting employment and employment practices,
              terms and conditions of employment and wages and hours, and is not
              engaged in any unfair labor practice, (b) there is no labor
              strike, dispute, slowdown or stoppage actually pending or
              threatened against UBNA, (c) no representation question exists
              respecting the employees of UBNA, (d) neither UBNA has experienced
              any strike, work stoppage or other labor difficulty, and (e) no
              collective bargaining agreement relating to employees of UBNA is
              currently being negotiated.

<PAGE>

       (k)    COMPLIANCE WITH LAW. The operations of UBNA have been conducted in
              accordance with all applicable laws and regulations of all
              Governmental Bodies having jurisdiction over them, except for
              violations thereof which are not likely to have a material adverse
              effect on the business or financial condition of UBNA, taken as a
              whole, or which would not require a payment by UBNA in excess of
              $20,000 in the aggregate, or which have been cured. UBNA has not
              received any notification of any asserted present or past failure
              by it to comply with any such applicable laws or regulations. UBNA
              has or shall apply for all material licenses, permits, orders or
              approvals from the Governmental Bodies required for the conduct of
              their businesses, and are not in material violation of any such
              licenses, permits, orders and approvals. All such licenses,
              permits, orders and approvals are in full force and effect, and no
              suspension or cancellation of any thereof has been threatened.

       (l)    TAX MATTERS.

              1.     UBNA: (1) has filed or shall file prior to Closing all
                     nonconsolidated and noncombined Tax Returns and all
                     consolidated or combined Tax Returns that include only UBNA
                     and not Palomine or its other Affiliates (for the purposes
                     of this Section, such tax Returns shall be considered
                     nonconsolidated and noncombined Tax Returns) required to be
                     filed through the date hereof and will have paid any Tax
                     due through the date hereof with respect to the time
                     periods covered by such nonconsolidated and noncombined Tax
                     Returns and shall timely pay any such Taxes required to be
                     paid by it after the date hereof with respect to such Tax
                     Returns and (2) shall prepare and timely file all such
                     nonconsolidated and noncombined Tax Returns required to be
                     filed after the date hereof and through the Closing Date
                     and pay all Taxes required to be paid by it with respect to
                     the periods covered by such Tax Returns; (B) all such Tax
                     Returns filed pursuant to clause (A) after the date hereof
                     shall, in each case, be prepared and filed in a manner
                     consistent in all material respects (including elections
                     and accounting methods and conventions) with such Tax
                     Return most recently filed in the relevant jurisdiction
                     prior to the date hereof, except as otherwise required by
                     law or regulation. Any such Tax Return filed or required to
                     be filed after the date hereof shall not reflect any new
                     elections or the adoption of any new accounting methods or
                     conventions or other similar items, except to the extent
                     such particular reflection or adoption is required to
                     comply with any law or regulation.

              2.     UBNA represents that prior to Closing, all consolidated or
                     combined Tax Returns (except those described in
                     subparagraph (1) above) required to be filed by any person
                     through the date hereof that are required or permitted to
                     include the income, or reflect the Activities, operations
                     and Transactions, of UBNA for any taxable period shall have
                     been timely filed, and the income, activities, operations
                     and Transactions of UBNA shall have been properly included
                     and reflected thereon. UBNA shall prepare and file, or
                     cause to be prepared and filed, all such consolidated or
                     combined Tax Returns that are required or permitted to
                     include the income, or reflect the activities, operations
                     and transactions, of UBNA, with respect to any taxable year
                     or the portion thereof ending on or prior to the Closing
                     Date, including, without limitation, UBNA consolidated

<PAGE>

                     federal income tax return for such taxable years. Prior to
                     Closing, UBNA will timely file a consolidated federal
                     income tax return for the taxable year ended December 31,
                     2006 and such return shall include and reflect the income,
                     activities, operations and transactions of UBNA for the
                     taxable period then ended, and hereby expressly covenants
                     and agrees to file a consolidated federal income tax
                     return, and to include and reflect thereon the income,
                     activities, operations and Transactions of UBNA for the
                     taxable period through the Closing Date. All Tax Returns
                     filed pursuant to this subparagraph (2) after the date
                     hereof shall, in each case, to the extent that such Tax
                     Returns specifically relate to UBNA, be prepared and filed
                     in a manner consistent in all material respects (including
                     elections and accounting methods and conventions) with the
                     Tax Return most recently filed in the relevant
                     jurisdictions prior to the date hereof, except as otherwise
                     required by law or regulation. Each of UBNA has paid or
                     will pay all Taxes that may now or hereafter be due with
                     respect to the taxable periods covered by such consolidated
                     or combined Tax Returns.

              3.     All amounts required to be withheld as of the Closing Date
                     for Taxes or otherwise have been withheld and paid when due
                     to the appropriate agency or authority.

              4.     There shall be delivered or made available to Palomine at
                     or prior to Closing true and complete copies of all income
                     Tax Returns (or with respect to consolidated or combined
                     returns, the portion thereof) and any other Tax Returns
                     requested by Palomine as may be relevant to UBNA or their
                     assets or operations for any and all periods ending after
                     June 30, 2007, or for any Tax years which are subject to
                     audit or investigation by any taxing authority or entity.

       (m)    Environmental Matters.

              1.     At all times prior to the date hereof, UBNA have complied
                     in all material respects with applicable environmental
                     laws, orders, regulations, rules and ordinances relating to
                     the Properties (as hereinafter defined), the violation of
                     which would have a material adverse effect on the business
                     or financial condition of UBNA, taken as a whole, or which
                     would require a payment by UBNA in excess of $20,000 in the
                     aggregate, and which have been duly adopted, imposed or
                     promulgated by any legislative, executive, administrative
                     or judicial body or officer of any Governmental Body.

              2.     The environmental licenses, permits and authorizations that
                     are material to the operations of UBNA, taken as a whole,
                     are in full force and effect.

8.     Notices.

       Any notice which any of the parties hereto may desire to serve upon any
       of the other parties hereto shall be in writing and shall be conclusively
       deemed to have been received by the party at its address, if mailed,
       postage prepaid, United States mail, registered, return receipt
       requested, to the following addresses:

          If to Palomine            Palomine Mining Inc.
                                    6420 West Kensington Road
                                    Oklahoma City, OK  73132
                                    Facsimile No.:  405.722.0644
                                    Attention:  Frank H. Ward

         If to UBNA:                Universal Bioenergy North America, Inc.
                                    823 South Sixth Street, Suite 100
                                    Las Vegas, NV  89101
                                    Facsimile No.:  ________________
                                    Attn: _____________________ President

<PAGE>

         If to Mortensen:           Mortensen Financial Limited
                                    #1 Mapp Street
                                    Belize City
                                    Belize
                                    Facsimile No.:  ________________
                                    Attention: Wilfred K. Alleyne, President

         If to the Shareholders:    Universal Bioenergy North America, Inc.
                                    823 South Sixth Street, Suite 100
                                    Las Vegas, NV  89101
                                    Facsimile No.:  ________________
                                    Attn:  _____________________ President

9.     SUCCESSORS.

       This Agreement shall be binding upon and inure to the benefit of the
       heirs, personal representatives and successors and assigns of the
       parties.

10.    CHOICE OF LAW.

       This Agreement shall be construed and enforced in accordance with the
       laws of the State of Nevada, and the parties submit to the exclusive
       jurisdiction of the courts of Nevada in respect of all disputes arising
       hereunder.

11.    COUNTERPARTS.

       This Agreement may be signed in one or more counterparts, all of which
       taken together shall constitute an entire agreement.

12.    CONFIDENTIAL INFORMATION.

       Each of Palomine and UBNA hereby acknowledges and agrees that all
       information disclosed to each other whether written or oral, relating to
       the other's business activities, its customer names, addresses, all
       operating plans, information relating to its existing services, new or
       envisioned products or services and the development thereof, scientific,
       engineering, or technical information relating to the others business,
       marketing or product promotional material, including brochures, product
       literature, plan sheets, and any and all reports generated to customers,
       with regard to customers, unpublished list of names, and all information
       relating to order processing, pricing, cost and quotations, and any and
       all information relating to relationships with customers, is considered
       confidential information, and is proprietary to, and is considered the
       invaluable trade secret of such party (collectively "Confidential
       Information"). Any disclosure of any Confidential Information by any
       party hereto, its employees, or representatives shall cause immediate,
       substantial, and irreparable harm and loss to the other. Each party
       understands that the other desires to keep such Confidential Information
       in the strictest confidence, and that such party's agreement to do so is
       a continuing condition of the receipt and possession of Confidential
       Information, and a material provision of this agreement, and a condition
       that shall survive the termination of this Agreement. Consequently, each
       party shall use Confidential Information for the sole purpose of
       performing its obligations as provided herein.

<PAGE>

13.    PUBLIC ANNOUNCEMENT.

       The parties shall make no public announcement concerning this agreement,
       their discussions or any other letters, memos or agreements between the
       parties relating to this agreement until such time as they agree to the
       contents of a mutually satisfactory press release which they intend to
       release on the date of execution of this Agreement. Either of the
       parties, but only after reasonable consultation with the other, may make
       disclosure if required under applicable law.

14.    ENTIRE AGREEMENT.

       This Agreement sets forth the entire agreement and understanding of the
       Parties hereto with respect to the transactions contemplated hereby, and
       supersedes all prior agreements, arrangements and understandings related
       to the subject matter hereof. No understanding, promise, inducement,
       statement of intention, representation, warranty, covenant or condition,
       written or oral, express or implied, whether by statute or otherwise, has
       been made by any Party hereto which is not embodied in this Agreement or
       the written statements, certificates, or other documents delivered
       pursuant hereto or in connection with the transactions contemplated
       hereby, and no party hereto shall be bound by or liable for any alleged
       understanding, promise, inducement, statement, representation, warranty,
       covenant or condition not so set forth.

15.    COSTS AND EXPENSES.

       Except as otherwise specifically set forth herein, each party will bear
       its own attorneys, brokers, investment bankers, agents, and finders
       employed by, such party. The parties will indemnify each other against
       any claims, costs, losses, expenses or liabilities arising from any claim
       for commissions, finder's fees or other compensation in connection with
       the transactions contemplated herein which may be asserted by any person
       based on any agreement or arrangement for payment by the other party.

16.    ATTORNEY'S FEES.

       Should any action be commenced between the parties to this Agreement
       concerning the matters set forth in this Agreement or the right and
       duties of either in relation thereto, the prevailing party in such Action
       shall be entitled, in addition to such other relief as may be granted, to
       a reasonable sum as and for its Attorney's Fees and Costs.

<PAGE>

17.    FINDERS.

       Palomine represents and warrants that there are no finders or other
       parties which have represented Palomine in connection with this
       transaction which have not been previously provided with appropriate
       compensation. In the event any such finders make a claim for any fee,
       share issuance of other compensation in connection with the transactions
       contemplated hereby, they shall be the sole responsibility of Palomine.
       UBNA represents and warrants that there are no finders or other parties
       which have represented UBNA in connection with this transaction. In the
       event any such finders make a claim for any fee, share issuance of other
       compensation in connection with the transactions contemplated hereby,
       they shall be the sole responsibility of UBNA.

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

For and on behalf of:               Palomine Mining Inc.
                                    a Nevada corporation

                                    By: /s/ Frank H. Ward
                                        ------------------------------
                                        Frank H. Ward
                                        Chief Executive Officer, President, and
                                         Treasurer

For and on behalf of:               Universal Bioenergy North America, Inc.
                                    a Nevada corporation

                                    By:
                                        ------------------------------
                                        President

For and on behalf of:               Mortensen Financial Limited,
                                    a ___________ corporation

                                    By: /s/ Wilfred K. Alleyne
                                        ------------------------------
                                        Wilfred K. Alleyne
                                        President

<PAGE>

For and on behalf of the Shareholders:

                                   WWF INTERNATIONAL LTD.
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   FORESTER CAPITAL, INC.
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   LYON GLOBAL INVESTMENT, LLC
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   MORRISON HOLDINGS, LLC
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   LAKEWOOD MANAGEMENT, INC.
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   KAIFENG, LTD
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   LEMMA II, LLC
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

<PAGE>

                                   By: /s/
                                       ------------------------------

                                   LEMMA II, LLC
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   L & S CAPITAL MANAGEMENT, LLC
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

                                   CENTAUR PARTNERS, INC.
                                   a ____________ corporation

                                   By: /s/ Yirlania Riuas Marin
                                       ------------------------------

                                   SUNRISE FINANCIAL, LLC
                                   a ____________ corporation

                                   By: /s/
                                       ------------------------------

<PAGE>
<TABLE>
<S>            <C>

Schedule 1(a)

                                        Schedule 1(a)

                                      Number                              Palomine Stock
         Name                       of Shares    Percent of Ownership     to be received
         ----                       ---------    --------------------     --------------

  1.  WWF International, Ltd.         500               10%                   200,000

  2.  Forester Capital, Inc.          500               10%                   200,000

  3.  Lyon Global Investment, LLC     500               10%                   200,000

  4.  Morrison Holdings, LLC          500               10%                   200,000

  5.  Lakewood Management, Inc.       500               10%                   200,000

  6.  Kaifeng, Ltd.                   500               10%                   200,000

  7.  Lemma II, LLC                   500               10%                   200,000

  8.  L&S Capital Management, LLC     500               10%                   200,000

  9.  Centaur Partners, Inc.          500               10%                   200,000

  10.  Sunrise Financial, LLC         500               10%                   200,000

</TABLE>

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