Document:

Unassociated Document

    Exhibit
      10-26

    

     

    PROMISSORY
      NOTE

     

    
      	$1,500,529.86	
              Dublin,
                Ireland

              March
                17, 2006

            

    

     

     

    On
      or
      before October 1, 2007 (herein called the “Maturity Date”), FOR VALUE RECEIVED,
      the undersigned, NEW
      MEDIA LOTTERY SERVICES INTERNATIONAL LTD, an Irish
      corporation
      (herein
      called “Maker”), promises to pay to the order of NEW
      MEDIA LOTTERY SERVICES, INC., a Delaware corporation
      (herein
      called “Payee”), in lawful currency of the United States of America, the
      principal sum of ONE MILLION FIVE HUNDRED THOUSAND FIVE HUNDRED TWENTY NINE
      AND
      86/100 DOLLARS ($1,500,529.86), together with interest thereon as hereinafter
      set forth.

     

    Subject
      to the terms and conditions of this Note, the unpaid principal balance from
      time
      to time outstanding under this Note during an applicable Monthly Period shall
      bear interest at a per annum rate equal to the Eurodollar Rate applicable to
      such Monthly Period. For purposes of this Note, the Eurodollar Rate for an
      applicable Monthly Period shall be determined as of the Interest Reset Date
      which is the first day of such Monthly Period, and (subject to the terms and
      conditions of this Note) such interest rate shall remain and continue as the
      Applicable Interest Rate for the entire unpaid principal balance from time
      to
      time outstanding under this Note at any time during such Monthly Period, until
      the next-occurring Interest Reset Date, at which time, the Eurodollar Rate
      shall
      again be determined and recalculated in accordance with the foregoing for the
      next-occurring Monthly Period.

     

    Accrued
      and unpaid interest hereunder shall be payable monthly, in arrears, on the
      first
      (1st) Business Day of each month, until maturity (whether as stated herein,
      by
      acceleration, or otherwise). Interest accruing hereunder shall be computed
      on
      the basis of a year of 360 days, and shall be assessed for the actual number
      of
      days elapsed, and in such computation, to the extent applicable, effect shall
      be
      given to any change in the Applicable Interest Rate as a result of any change
      in
      the Prime Rate on the date of each such change in the Prime Rate. A late payment
      charge equal to 5% of each late payment may be charged on any payment not
      received by the Payee within 10 calendar days after the payment due date, but
      acceptance of payment of this charge shall not waive any Default under this
      Note.

     

    The
      Applicable Interest Rate and the amount and date of any repayments shall be
      noted on Payee’s records, which records shall be conclusive evidence thereof,
      absent manifest error; provided, however, any failure by Payee to make any
      such
      notation, or any error in any such notation, shall not relieve Maker of its
      obligations to repay Payee all amounts payable by Maker to Payee under or
      pursuant to this Note, when due in accordance with the terms
      hereof.

     

    Maker
      may
      prepay all or part of the outstanding balance of this Note at any time without
      penalty or premium; provided, however, Maker shall not be permitted to reborrow
      any amounts so prepaid.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      the
      event that any payment under this Note becomes due and payable on any day which
      is not a Business Day, the due date thereof shall be extended to the next
      succeeding Business Day, and, to the extent applicable, interest shall continue
      to accrue and be payable thereon during such extension at the rates set forth
      in
      this Note.

     

    All
      payments to be made by Maker to Payee under or pursuant to this Note shall
      be in
      immediately available funds, without setoff or counterclaim, and in the event
      that any payments submitted hereunder are in funds not available until
      collected, said payments shall continue to bear interest until collected. Maker
      hereby authorizes Payee to charge any account of Maker with Payee for all sums
      due hereunder when due in accordance with the terms hereof.

     

    If
      Payee
      determines that, (a) by reason of circumstances affecting the foreign exchange
      markets generally, deposits in eurodollars in the applicable amounts or for
      the
      relative maturities are not being offered to Payee, or (b) if the rate of
      interest referred to in the definition of "Eurodollar Rate" does not accurately
      or fairly cover or reflect the cost to Payee of making or maintaining the
      Indebtedness hereunder at the Eurodollar Rate, then Payee shall forthwith give
      notice thereof to the Maker. Thereafter, until Payee notifies Maker that such
      conditions or circumstances no longer exist, the Indebtedness from time to
      time
      outstanding hereunder shall bear interest at the Prime-based Rate.

     

    If,
      after
      the date hereof, the introduction of, or any change in, any applicable law,
      rule
      or regulation or in the interpretation or administration thereof by any
      governmental authority charged with the interpretation or administration
      thereof, or compliance by Payee with any request or directive (whether or not
      having the force of law) of any such authority, shall make it unlawful or
      impossible for the Payee to make or maintain any Indebtedness hereunder with
      interest at the Eurodollar Rate, Payee shall forthwith give notice thereof
      to
      Maker. Thereafter, until Payee notifies Maker that such conditions or
      circumstances no longer exist, the right of Maker to have the Indebtedness
      hereunder bear interest at the Eurodollar Rate shall be suspended, and the
      entire principal amount outstanding under this Note shall bear interest at
      the
      Prime-based Rate.

     

    If
      (a)
      Maker fail(s) to pay this Note, or any part thereof, or any of the Indebtedness
      when due, by maturity, acceleration or otherwise, or fail(s) to pay any
      Indebtedness owing on a demand basis upon demand; or (b) Maker fails to comply
      with any of the terms or provisions of any agreement between Maker and Payee;
      or
      (c) Maker becomes insolvent or the subject of a voluntary or involuntary
      proceeding in bankruptcy, or a reorganization, arrangement or creditor
      composition proceeding, ceases doing business as a going concern, dissolves
      or
      is the subject of a dissolution, merger or consolidation; or (d) any warranty
      or
      representation made by Maker or any guarantor in connection with this Note
      or
      any of the Indebtedness shall be discovered to be untrue or incomplete in any
      material respect; or (e) there is any termination, notice of termination, or
      breach of any guaranty, pledge, collateral assignment or subordination agreement
      relating to all or any part of the Indebtedness; or (f) there is any failure
      by
      Maker or any guarantor to pay, when due, any of its indebtedness (other than
      to
      Payee) or in the observance or performance of any term, covenant or condition
      in
      any document evidencing, securing or relating to such indebtedness; or (g)
      Payee
      deems itself insecure, believing in good faith that the prospect of payment
      or
      performance of this Note or any of the Indebtedness is materially impaired
      or
      shall fear deterioration, removal or waste of any of the Collateral; or (h)
      there is filed or issued a levy or writ of attachment or garnishment or other
      like judicial process upon Maker, then Payee, upon the occurrence and at any
      time during the continuance or existence of any of these conditions or events
      (each a “Default”), may at its option and without prior notice to Maker, declare
      any or all of the Indebtedness to be immediately due and payable
      (notwithstanding any provisions contained in the evidence of it to the
      contrary), charge interest at the default rate provided in the document
      evidencing the relevant Indebtedness, and exercise any one or more of the rights
      and remedies granted to Payee by any agreement with Maker or which are granted
      to Payee under applicable law, or otherwise.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      anything to the contrary set forth in this Note, upon the occurrence and during
      the continuance or existence of any Default hereunder, the Indebtedness
      outstanding hereunder shall bear interest at a per annum rate equal to the
      rate
      of interest otherwise prevailing under this Note plus 3% per annum (but in
      no
      event in excess of the maximum rate permitted by law), which interest shall
      be
      payable upon demand.

     

    Maker
      waives presentment, demand, protest, notice of dishonor, notice of demand or
      intent to demand, notice of acceleration or intent to accelerate, and all other
      notices, and agrees that no extension or indulgence to Maker, or release,
      substitution or nonenforcement of any security, or release or substitution
      of
      any guarantor or any other party, whether with or without notice, shall affect
      the obligations of Maker. Maker waives all defenses or right to discharge
      available under Section 3-605 of the Uniform Commercial Code and waives all
      other suretyship defenses or right to discharge. Maker agrees that Payee has
      the
      right to sell, assign, or grant participations, or any interest, in any or
      all
      of the Indebtedness, and that, in connection with such right, but without
      limiting its ability to make other disclosures to the full extent allowable,
      Payee may disclose all documents and information which the Payee now or later
      has relating to Maker and the Indebtedness.

     

    Maker
      agrees to reimburse Payee, or any other holder or owner of this Note, for any
      and all costs and expenses (including, without limit, court costs, legal
      expenses and reasonable attorneys’ fees, whether or not suit is instituted, and,
      if suit is instituted, whether at the trial court level, appellate level, in
      a
      bankruptcy proceeding or otherwise) incurred in collecting or attempting to
      collect this Note or the Indebtedness or incurred in any other matter or
      proceeding relating to this Note or the Indebtedness.

     

    Maker
      acknowledges and agrees that there are no contrary agreements, oral or written,
      establishing a term of this Note and agrees that the terms and conditions of
      this Note may not be amended, waived or modified except in a writing signed
      by a
      duly authorized officer of Payee expressly stating that the writing constitutes
      an amendment, waiver or modification of the terms of this Note. If any provision
      of this Note is unenforceable in whole or part for any reason, the remaining
      provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.

     

    This
      Note
      shall bind Maker and Maker’s respective successors and assigns.

     

    For
      the
      purposes of this Note, the following terms shall have the following
      meanings:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Applicable
      Interest Rate” shall mean, in respect of the Indebtedness outstanding under this
      Note at any time, the Eurodollar Rate or the Prime-based Rate, as determined
      in
      accordance with the terms and conditions of this Note.

     

    “Business
      Day” shall mean any day, other than a Saturday, Sunday or holiday, on which
      Payee is open for all or substantially all of its domestic and international
      business (including dealings in foreign exchange) in Harrisonburg, Virginia,
      and, in respect of notices and determinations relating to the Eurodollar Rate,
      also a day on which transactions in the eurodollar market are
      conducted.

     

    “Eurodollar
      Rate” shall mean, in respect of any applicable Monthly Period, a per annum
      interest rate, calculated as of the Interest Reset Date which is the first
      day
      of such Monthly Period, and which shall be the Applicable Interest Rate under
      this Note for such Monthly Period, which is equal to the sum of the Eurodollar
      Margin plus the quotient of the following (which amount shall be rounded
      upwards, if necessary, to the nearest 1/16th of 1%):

     

    
      	 	
              (a)

            	
              the
                per annum interest rate at which Comerica Bank’s Eurodollar Lending Office
                offers deposits to prime Payees in the eurodollar market for a period
                of
                time equal to such Monthly Period at or about 11:00 a.m. (Detroit,
                Michigan time) (or as soon thereafter as practical) on each such
                Interest
                Reset Date;

            

    

     

    divided
      by

     

    
      	 	
              (b)

            	
              a
                percentage (expressed as a decimal) equal to 1.00 minus the maximum
                rate
                during such Interest Period at which Comerica Bank is required to
                maintain
                reserves on "Euro-currency Liabilities" as defined in and pursuant
                to
                Regulation D of the Board of Governors of the Federal Reserve System
                or,
                if such regulation or definition is modified, and as long as Comerica
                Bank
                is required to maintain reserves against a category of liabilities
                which
                includes eurodollar deposits or includes a category of assets which
                includes eurodollar loans, the rate at which such reserves are required
                to
                be maintained on such category.

            

    

     

    “Eurodollar
      Lending Office” shall mean Comerica Bank’s office located in the Cayman Islands,
      British West Indies, or such other branch of said Bank, domestic or foreign,
      as
      said Bank may hereafter designate as its Eurodollar Lending Office by notice
      to
      Maker.

     

    “Eurodollar
      Margin” shall mean two and one half percent (250 basis points) per
      annum.

     

    “Interest
      Reset Date” shall mean the first (1st) Business Day of each succeeding calendar
      month.

     

    “Monthly
      Period” shall mean a period of time commencing on a respective Interest Reset
      Date (i.e., the first (1st) Business Day of a calendar month), and ending on
      the
      next-occurring Interest Reset Date (i.e., the first (1st) Business Day of the
      next calendar month).

     

    “Prime
      Rate” shall mean the per annum interest rate established by Comerica Bank as its
      prime rate for its Makers, as such rate may vary from time to time, which rate
      is not necessarily the lowest rate on loans made by Comerica Bank at any such
      time.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Prime-based
      Rate” shall mean a per annum interest rate equal to the Prime Rate.

     

    No
      delay
      or failure of Payee in exercising any right, power or privilege hereunder shall
      affect such right, power or privilege, nor shall any single or partial exercise
      thereof preclude any further exercise thereof, or the exercise of any other
      power, right or privilege. The rights of Payee under this Agreement are
      cumulative and not exclusive of any right or remedies which Payee would
      otherwise have, whether by other instruments or by law.

     

    MAKER
      AND
      PAYEE ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE,
      BUT
      THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE
      OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
      AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT
      OF
      LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
      TO, THIS NOTE OR THE INDEBTEDNESS HEREUNDER.

     

     

    
      	 	NEW
              MEDIA LOTTERY SERVICES, INTERNATIONAL LTD, an Irish
              corporation
	 	 
	 	By:
              ________________________________________
	 	 
	 	Its:
              ________________________________________ 
	 	 
	 	 
	 	Address:	
              Newmarket
                Partnership
G9
                Calmount Park
Ballymount,
                Dublin 12
Ireland

            

    

     

    
      
        
        

      

      
        5EXHIBIT 10.27

                          BALMORAL CONSULTANT AGREEMENT

This  agreement  dated  Sept.  12th,  2005,  is  made  by  and  between  Gateway
International  Holdings,  Inc. (OTC: GWYLPK) ("Company"),  Gateway International
Holdings,  Inc 3840 East Eagle Drive Anaheim,  CA 92807 Phone  714-630-6253  AND
Balmoral Financial Services Companies (DBA Balmoral Companies).  Located at 7118
Dublin rd Dublin Ohio USA  referred to as (BALMORAL  or  "Consultant")  Whereas,
Gateway is involved financing and merger negotiations,  and Whereas Balmoral can
provide  assistance  in these  areas,  therefore in  consideration  of the below
conditions and parties agree to enter into said agreement as follows:

1. Forfeiting, Debt        Equity financing, Consultant Services.
The company hereby  employs the consultant to perform the following  services in
accordance  with the  terms and  conditions  set  forth in this  agreement.  The
consultant will consult with the officers and employees of the company and other
operation  (Exhibit A)  concerning  matters  relating to the  management  of the
company,  their  policies,  and generally any matter arising out of the business
affairs of the company on a specific  transaction  to obtain  financing  for the
project listen in exhibit A.

2. Terms of Agreement.
This  agreement  will begin (August 31st,  2005) and will end  (September  28th,
2006)  either  party may cancel this  agreement on (30) days notice to the other
party in writing, by registering letter or DHL or Federal Express to the address
named below.

3. Time Devoted to Consultant.
It is  anticipated  the  consultant  will  spend  several  hours  each  week  in
fulfilling its obligations under this contract,  use its contact in order to try
and being about additional  financing for the Company or the Companies  clients,
or its assignees. The particular amount of time may vary from day to day or week
to week.  However,  the consultant  shall devote time and influence only on this
transaction  in  accordance  with  this  agreement.  If more  time  than this is
required other arrangements need to be made of this agreement amended.

4. Payment to Consultant.
The  consultant  will be paid upon signature  $10,055.  (Ten thousand fifty five
dollars USD  (Invoice) for first part of the work  performed in accordance  with
this  agreement  and wired today  August  22ed,  2005.  The  consultant  will be
additionally  paid in  2,300,000  shares of 144 stock  issued to Balmoral or its
assignees.  This stock will be due upon the execution of the final  documents in
exhibit  A,  however  the  350,000  144 from the  total  will be  issued  at the
executing this agreement. The balance of shares will be earned services once the
equity  line  documents  similar  to the one noted in  Exhibit A are  issued and
executed  by GWYI or its  assignee  and the  investment  bank or advisor for the
equity financing contemplated.

<PAGE>

5. Independent Contractor.
Both the company and the  consultant  agree that the  consultant  agree that the
consultant  will act as an  independent  contractor  in the  performance  of its
duties under this contract and if contracts for  financing are  acceptable  will
make other fees at closing. Accordingly, the consultant shall be responsible for
payment of all taxes including Federal, State and local taxes arising out of the
consultant's  activities in accordance with this contract,  including by the way
of  illustration  but not  limitation,  Federal  and State  income  tax,  Social
Security tax, Unemployment Insurance taxes, and any other taxes business license
fee as required.

6. Confidential Information.
The consultant agrees that from time to time they will become aware of corporate
business in the Board  meetings (if invited to such meeting as a consultant)  of
the company and keep such information confidential. Consultant is not considered
an insider. Any information received by the consultant during any furtherance of
the  consultant's  obligations in accordance with this contract,  which concerns
the  personal,  financial or other affairs of the company will be treated by the
consultant  in full  confidence  and will not be revealed to any other  persons,
firms or  organization.  Consultant  is not  responsible  for any outcome of the
transactions of the Company.

7. Employment of Others.
The Company may from time to time  request that the  consultant  arrange for the
services of others.  All costs to the consultant for those services will be paid
by the company from additional funds but in no event shall the consultant employ
others without the prior authorization of the Company.

8. Transactions
All existing transactions and all additional transactions including other equity
or debt financing for the Company that spring from these  transactions  shall be
administered  under best efforts under the terms of this Agreement and shall not
circumvention Balmoral or Company under similar arrangements.

9. Free Trading for Collateral and Finance
In general  Restrictions on Transferability for free trading shares will be done
by insider or  directors  making  loans for such shares to the Company  under an
acceptable agreement.  The Company having then access to these shares shall make
them  available  to a  contract  of the  Consultant  to  sell,  assign,  pledge,
encumber,  or  hypothecate  in any manner  that such  transfer  is in the mutual
interest of GWYI Board of Director in order to have  certain  cash  advances for
the merger and other  financing  projects of the  Company.  The person or entity
with such shares will make them  available  to Balmoral or its  assignees in the
electronic  matter,  and in the names  advised by  Balmoral  necessary  for such
financing under separate  documentation.  In addition, the Equity financing will
be also done by separate agreement under Balmoral's supervision. These fees will
be exactly  $100,000  dollars one hundred  thousand  dollars and will be paid to
Balmoral upon equity finance  documents  being  delivered (SB 2) and some equity
finance actually being paid to GWYI or its assignees or successors.

<PAGE>

10. Non-Circumvention
Company is free to work with other  consultants  and vendor,  on other projects,
however the Company will use the Consultant  concerning the project contemplated
by Company and  Balmoral  and involve no other  individuals,  banks,  investors,
manufacturers,  dealers or agents of any companies,  without the express written
permission of Balmorals,  nor shall the Company  circumvention  Balmoral for its
contracts.

11. Limitation of Liability of Parties
In no event shall the parties be liable for any indirect, special, incidental or
consequential damages of any nature or kind including but not limited to delays,
loss of use,  loss of data,  loss of  profits,  or loss of  production,  even if
stockholders  or officers  have or have not been advised of the  possibility  of
such damages.

12. Product Liability
With  respect  to all  products  bought or sold by  Company,  Consultant  is not
responsible to third parties for any defect,  negligence,  product liability, or
any other  theory  commercial  or  otherwise,  concerning  the  liability of the
products, building or construction.

13. Indemnity
Both Company and Consultant agree to defend,  indemnify and save all stockholder
of both Company and Consultant harmless from any and all claims, actions, suits,
liabilities,  loss cost or damage (including  attorneys' fee) incurred by either
party with respect to any inaccurate representation by or breach of any warranty
or obligation of Parties  hereunder.  The consultant is not  responsible for the
success for the forfeiting, financing or Merger contemplated by the Company.

14. Excusable Delays, Force Majeure
Both  parties  shall not be liable for delays in delivery or other  performances
due to causes, whether or not foreseeable, beyond its reasonable control or that
of  subcontractors  or  suppliers,  research  and  development  delays  if  any,
including  without  limitation  events  referred  to as  acts  of  God,  acts of
omissions of any government or agency thereof,  change of law,  strikes or labor
disputes, unavoidable transportation delays, civil disturbances,  war, terrorism
or threat thereof (whether actual or perceived, or general or specific),  fires,
floods, earthquakes,  explosions,  unavailability or cost-prohibitive pricing of
goods,  unavailability or cost-prohibitive pricing of the devices,  investments,
financing with respects to Bank, investors, or other financial institutions,  as
the case may be, or emergency requirements of other clients. In the event of any
such delay, the date of performance  shall be extended for a period equal to the
time lost by reason of such delay, plus a reasonable time to resume performance.

15. Entire Agreement
This Agreement constitutes the entire agreement between Company and Consultant.

16. Modification
This Agreement shall not be modified in any way unless agreed in writing by duly
authorized representatives of Company and Consultant.

<PAGE>

17. Severability
If any provision of this Agreement including any limitations shall be determined
by a court  of  competent  jurisdiction  to be  invalid  of  unenforceable,  the
provision  shall be deemed to be severable  from the remainder of this Agreement
and shall not cause the  invalidity  or  unenforceable  of the remainder of this
Agreement  or of any  other  remedy  or  limitation  thereof  set  forth in this
Agreement.

18. Governing Law
This Agreement shall be in force for 19 months and extended 12 month  increments
unless  discontinued in writing.  This agreement shall be governed and construed
in accordance to the laws of the State of Ohio. Franklin County United States of
America (excluding any conflicts of laws rules).

19. Execution
In witness  whereof the parties sign this  Agreement or they're duty  authorized
representatives  and such action has been  approved  by Company  and  Consultant
resolutions on the duty set forth below.

Effective  Date Upon  signature by all parties  hereto this  Agreement  shall be
effective as of date hereof IN WITNESS THEREOF, the parties hereto have hereunto
set their  hands and seals this  August 22,  2005.  Company  arrest it has had a
Board  meeting in such action on August  22nd and will later  supply a Corporate
Resolution.

/s/ Larry Consalvi                          /s/ Jitu Banker
----------------------------------          ------------------------------------
Name & Authorized Signature Company         Name & Authorized Signature Company

Gateway International Holdings, Inc. (OTC: GWYI. PK) ("Company")
Gateway International Holdings Inc 3840 East Eagle Drive Anaheim, CA 92807

-------------------------------------------
Name & Signature by Rodney Kincaid, CEO
BALMORAL FINANCES SERVICES COMPANIES

<PAGE>

xxxxxxxxxxxxxx, 200x                        EXHBIT A

                                            CONFIDENTIAL
                                             TERM SHEET

Issuer:                 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx ("Company")

Securities:             The Company's common stock ("Stock")

Structure:              Equity Line of Credit ("Line")

Line Amount:            The Investor shall commit to purchase up to $15,000,000
                        of the  Company's  Stock  over the  course  of 36 months
                        ("Line Period"),  after a registration  statement of the
                        Stock has been declared effective  ("Effective Date") by
                        the U.S. Securities and Exchange Commission ("SEC").

Put Amount:             The amount that the Company shall be entitled to
                        request from each of the purchase "Puts", shall be equal
                        to the  greater of either 1)  $100,000 or 2) 200% of the
                        averaged   daily  volume  (U.S  market   only)   ("ADV")
                        multiplied by the average of the 3 daily closing  prices
                        immediately  preceding  the Put  Date.  The ADV shall be
                        computed  using the three (3) trading  days prior to the
                        Put Date.

Pricing Period:         The 5 consecutive trading days immediately after the Put
                        Date.

Market Price:           The  lowest  closing  bid price of the Stock  during the
                        Pricing Period.

Purchase Price:         The  Purchase  Price  shall be set at 95% of the  Market
                        Price.

Put Date:               The date that the  Investor  receives Put Notice of draw
                        down by Company of a portion of the Line.

Put Restrictions:       Shall mean the days between the Put Date and the Closing
                        Date with  respect to that Put.  During  this time,  the
                        Company  shall not be  entitled  to deliver  another Put
                        Notice.

Lock-Up:                The  Company  agrees  that  any and  all  its  officers,
                        insiders,  affiliates  or other  related  parties  shall
                        refrain  from  selling  any Stock,  during  the  Pricing
                        Period.

Floor:                  The Company shall automatically withdraw that portion of
                        the put notice amount,  if the Market Price with respect
                        to that Put does not meet the Minimum  Acceptable Price.
                        The  Minimum  Acceptable  Price is defined as 75% of the
                        closing  bid price of the common  stock for the ten (10)
                        trading days prior to the Put Date.

Closing Date:           Seven (7)  business  days  after the Put Date,  for each
                        tranche.

------        -------
 J             D

<PAGE>

Short Sales:            During the term of this  agreement,  the Investor agrees
                        not to  engage  in any  short  selling  of the  Issuer's
                        stock.

Document
Preparation Fee:        The  Company  agrees  to pay a  non-refundable  document
                        preparation  fee of $10,000 in cash for the  preparation
                        of the  Investment  Agreement  and  Registration  Rights
                        Agreement.  The company agrees to pay $5000 in cash upon
                        the execution of this Term Sheet and the remaining $5000
                        in cash upon closing of the first Put.

Registration:           The Company  shall have a draft  registration  statement
                        covering the underlying  Stock of the Line,  prepared by
                        the   Execution   Date,   with   corporate   counsel  as
                        recommended   by  Dutchess   Capital   Management,   LLC
                        ("Dutchess")  for the filing of  registration  statement
                        with  the  SEC,  within  15 days of the  Execution  Date
                        ("Filing Date").

Unaffiliated Broker-
Dealer:                 The  Company   shall  be  required  to  include  in  the
                        registration  statement  for the Line,  an  unaffiliated
                        broker dealer, as required by the SEC.

Exclusivity:            From the date of the  execution of this term sheet until
                        the effective  date,  the Company agrees not to pursue a
                        transaction of the nature  contemplated  herein with any
                        other  person  unless and until good faith  negotiations
                        with the Investor have terminated.

Confidentiality:        The  Company  agrees  to keep  this  term  sheet and its
                        contents  confidential  and not to  distribute it to, or
                        discuss  it  with,  any  third  party  (other  than  the
                        Company's  legal and  financial  advisors,  who shall be
                        informed of the  confidential  nature of this  document)
                        without the prior express written consent of Dutchess.

This term sheet is intended for discussion purposes only and is not an offer for
the purchase or sale of the Company's  securities.  Closing is subject to mutual
agreement of final  documentation  between the Company and  Investor.  This term
sheet will be considered void if not executed by both parties prior to the close
of business on xxxxxxxxxxxxxx. The undersigned Company officer, on behalf of the
Company  hereby  represents  and  warrants  that this  term  sheet has been duly
authorized, executed and delivered by the Company.

Agreed and Accepted;

By the Company:                                   By PIPE COMPANY SELECTED BY
                                                           Balmoral

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

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

Date:_________________________                    Date:_________________________

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