Document:

Exhibit 10.1

    Exhibit
      10.1

    

    NEITHER
      THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES OF COMMON
      STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS HAVE
      BEEN
      ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON
      EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES
      AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED,
      PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
      STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER SECURITIES UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR
      AN
      OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH WARRANTS AND SUCH SHARES
      OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
      ACT AND SUCH STATE SECURITIES LAWS.

    

    VOID
      AFTER 5:00 P.M. ON MARCH 27, 2011

    

    AFP
      IMAGING CORPORATION

    WARRANT
      CERTIFICATE

    

    50,000
      Common Stock Purchase Warrants

    

    
      	Warrant
              Certificate No. 06 - __	
              Elmsford,
                New York

              As
                of March 28, 2006

            

    

     

    THIS
      IS TO CERTIFY THAT,
      for
      value received,  (“Warrantholder”)
      is the registered owner of the number of common stock purchase warrants (each,
      a
“Warrant”) of AFP
      Imaging Corporation,
      a New
      York corporation (the “Company”), set forth above, each Warrant entitling the
      owner thereof to purchase from the Company, at a purchase price of $1.98 per
      Warrant (the “Purchase Price”), as adjusted from time to time in accordance with
      section 3 of this Warrant Certificate, at any time on or after the Commencement
      Date (as defined in paragraph 1(b) below) and terminating at 5:00 p.m.,
      Elmsford, New York time, on March 27, 2011 (the “Expiration Time”), one duly
      authorized, validly issued, fully paid and non-assessable share (each, a
“Warrant Share”) of the common stock, par value $0.01 per share (“Common
      Stock”), of the Company, subject to the terms and conditions contained herein.
      The number of Warrants evidenced by this Warrant Certificate (and the number
      and
      kind of securities which may be purchased upon exercise hereof) set forth above,
      and the Purchase Price per share set forth above, are as of the date hereof.
      As
      provided herein, the Purchase Price and the number of shares of Common Stock
      or
      other securities which may be purchased upon the exercise of the Warrants
      evidenced by this Warrant Certificate are, upon the happening of certain events,
      subject to modification and adjustment.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Warrant Certificate, together with any warrant certificate(s) issued in
      replacement or substitution hereof (as provided for herein) evidencing all
      or
      part of the Warrants evidenced hereby, are sometimes collectively referred
      to
      herein as the “Warrant Certificates.”

    

    The
      rights
      of the registered holder of this Warrant Certificate shall be subject to the
      following further terms and conditions:

    

    1. Exercise
      of Warrants.

    

    (a)
       The
      Warrants may be exercised, in whole or in part, at any time and from time to
      time, during the period commencing on the Commencement Date and terminating
      at
      the Expiration Time by surrendering this Warrant Certificate, with the Exercise
      Form provided for herein duly completed and executed by the Warrantholder or
      by
      the Warrantholder’s duly authorized attorney-in-fact, at the principal office of
      the Company, presently located at 250 Clearbrook Road, Elmsford, New York 10523,
      or at such other office or agency in the United States as the Company may
      designate by notice in writing to the Warrantholder (in either event, the
“Company Offices”), accompanied by payment in full, either in the form of cash,
      bank cashier’s check or certified check payable to the order of the Company, of
      the Purchase Price payable in respect of the Warrants being exercised or by
      “cashless exercise” as provided in paragraph 1(c).

    

    (b) For
      purposes of this Warrant Certificate, the term “Commencement Date” shall mean
      March 28, 2006.

    

    (c) Notwithstanding
      anything to the contrary contained in paragraph 1(a), payment of the applicable
      Purchase Price may be made by means of a “cashless exercise” through the
      surrender of the number of Warrants and receipt of the number of shares of
      Common Stock (in each case, as adjusted to reflect the provisions of section
      3),
      determined based upon the following formula:

    

    X
      = 
      Y(A-B)

    A

    

    
      	 	
              where:

            	
              X
                =

            	
              the
                number of shares of Common Stock to be issued to Warrantholder upon
                exercise pursuant to this paragraph
                1(c);

            

    

    
      	 	 	
              Y
                =

            	
              the
                number of shares of Common Stock issuable upon exercise of the Warrants
                so
                surrender, without giving effect to this paragraph
                1(c);

            

    

    
      	 	 	
              A
                =

            	
              the
                per share Current Market Price (as such term is defined in paragraph
                3(e))
                on the date of receipt of this Warrant Certificate and completed
                Exercise
                Form; and

            

    

    
      	 	 	
              B
                =

            	
              the
                Purchase Price in effect on the date of receipt by the Company of
                this
                Warrant Certificate and completed Exercise
                Form.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) On
      the day
      immediately following the date of a valid exercise of any Warrants, the
      Warrantholder exercising such Warrant(s) shall be deemed to have become the
      holder of record for all purposes of the Warrant Shares to which such valid
      exercise relates.

    (e) As
      soon as
      practicable, but not in excess of five days, after the valid exercise of all
      or
      part of the Warrants evidenced by this Warrant Certificate, the Company, at
      the
      Company’s expense (including the payment by Company of any applicable issuance
      and similar taxes), will cause to be issued in the name of and delivered to
      the
      Warrantholder, or such other party identified in the purchase form, certificates
      evidencing the number of duly authorized, validly issued, fully paid and
      non-assessable Warrant Shares to which the Warrantholder, or such other party
      identified in the Exercise Form, shall be entitled upon such exercise, as
      adjusted to reflect the effects, if any, of the anti-dilution provisions of
      section 3 of this Warrant Certificate, such certificates to be in such
      reasonable denominations as Holder shall request when delivering the duly
      completed Exercise Form.

    

    (f) No
      certificates for fractional Warrant Shares shall be issued upon the exercise
      of
      any of the Warrants but, in lieu thereof, the Company shall, upon exercise
      of
      all the Warrants, round up any fractional Warrant Shares to the nearest whole
      share of Common Stock.

    

    (g) If
      fewer
      than all of the Warrants are exercised, the Company shall, upon each exercise
      prior to the Expiration Time, execute and deliver to the Warrantholder a new
      Warrant Certificate (dated as of the date hereof) evidencing the balance of
      the
      Warrants that remain exercisable.

    

    2. Issuance
      of Common Stock; Reservation of Warrant Shares.
      The
      Company covenants and agrees that:

    

    (a)
       all
      Warrant Shares which may be issued upon the exercise of all or part of the
      Warrants will, upon issuance in accordance with the terms hereof, be validly
      issued, fully paid and non-assessable and free from all taxes, liens and charges
      with respect to the issue thereof;

    

    (b) at
      all
      times prior to the Expiration Time, the Company shall keep reserved for issuance
      a sufficient number of authorized shares of Common Stock to permit the exercise
      in full of the Warrants evidenced by this Warrant Certificate; and

    

    (c) if
      any
      shares of Common Stock to be reserved for the purpose of the issuance of Warrant
      Shares upon the exercise of Warrants require registration with, or approval
      of,
      any governmental authority under any federal or state law before such shares
      may
      be validly issued or delivered upon exercise, then the Company will promptly
      use
      its best efforts to effect such registration or obtain such approval, as the
      case may be.

    

    3. Adjustments
      of Purchase Price, Number and Character of Warrant Shares, Number of
      Warrants.
      The
      Purchase Price and the number and kind of securities purchasable upon the
      exercise of each Warrant shall be subject to adjustment from time to time upon
      the happening of the events enumerated in this section 3.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) Stock
      Dividends, Subdivisions and Combinations.
      In case
      the Company shall at any time on or before the Expiration Time:

    

    (i) pay
      a
      dividend in shares of Common Stock or make a distribution in shares of Common
      Stock or such other stock to holders of all its outstanding shares of Common
      Stock;

    (ii) subdivide,
      reclassify or recapitalize the outstanding shares of Common Stock into a greater
      number of shares; 

    (iii) combine,
      reclassify or recapitalize the outstanding shares of Common Stock into a smaller
      number of shares of Common Stock; or

    (iv) issue
      by
      reclassification of shares of Common Stock into any other securities of the
      Company (including any such reclassification in connection with a consolidation
      or merger in which the Company is the continuing corporation);

    

    then
      the
      number and kind of Warrant Shares purchasable upon exercise of each Warrant
      outstanding immediately prior thereto shall be adjusted so that the
      Warrantholder shall be entitled to receive the kind and number of shares of
      Common Stock or other securities of the Company which the Warrantholder would
      have owned or have been entitled to receive after the happening of any of the
      events described above had such Warrant been exercised in full immediately
      prior
      to the earlier of the happening of such event or any record date in respect
      thereto. In the event of any adjustment of the number of Warrant Shares
      purchasable upon the exercise of each then outstanding Warrant pursuant to
      this
      paragraph 3(a), the Purchase Price shall be adjusted to be the amount resulting
      from dividing the number of shares of Common Stock (including fractional shares
      of Common Stock) covered by such Warrant immediately after such adjustment
      into
      the total amount payable upon exercise of such Warrant in full immediately
      prior
      to such adjustment. An adjustment made pursuant to this paragraph 3(a) shall
      become effective immediately after the effective date of such event retroactive
      to the record date for any such event. Such adjustment shall be made
      successively whenever any event listed in clauses (i) through (iv) of this
      paragraph 3(a) shall occur.

    

    (b) Extraordinary
      Dividends.
      In case
      the Company shall, at any time on or before the Expiration Time, fix a record
      date for the issuance of rights, options, or warrants to all holders of
      outstanding shares of Common Stock, entitling such holders (for a period
      expiring within 45 days after such record date) to subscribe for or purchase
      shares of Common Stock (or securities exchangeable for or convertible into
      shares of Common Stock) at a price per share of Common Stock (or having an
      exchange or conversion price per share of Common Stock, with respect to a
      security exchangeable for or convertible into shares of Common Stock) which
      is
      lower than the Current Market Price per share of Common Stock on such record
      date, then the Purchase Price shall be adjusted so that the Purchase Price,
      as
      so adjusted, shall equal the price determined by multiplying the Purchase Price
      in effect immediately prior to such record date by a fraction, of which (i)
      the
      numerator shall be the number of shares of Common Stock outstanding on such
      record date plus
      the
      number of shares of Common Stock which the aggregate offering price of the
      total
      number of shares of Common Stock so to be offered (or the aggregate initial
      exchange or conversion price of the exchangeable or convertible securities
      so to
      be offered) would purchase at such Current Market Price and (ii) the denominator
      shall be the number of shares of Common Stock outstanding on such record date
      plus
      the
      number of additional shares of Common Stock to be offered for subscription
      or
      purchase (or into which the exchangeable or convertible securities so to be
      offered are initially exchangeable or convertible). Such adjustment shall become
      effective at the close of business on such record date; provided,
      however,
      to the
      extent that shares of Common Stock (or securities exchangeable for or
      convertible into shares of Common Stock) are not delivered after the expiration
      of such rights, options, or warrants, the Purchase Price shall be readjusted
      (but only with respect to Warrants exercised after such expiration) to the
      Purchase Price which would then be in effect had the adjustments made upon
      the
      issuance of such rights, options, or warrants been made upon the basis of
      delivery of only the number of shares of Common Stock (or securities
      exchangeable for or convertible into shares of Common Stock) actually issued.
      In
      case any subscription price may be paid in a consideration part or all of which
      shall be in a form other than cash, the value of such consideration shall be
      as
      determined in good faith by the Board of Directors of the Company and shall
      be
      described in a statement mailed to the Warrantholder. Shares of Common Stock
      owned by or held for the account of the Company shall not be deemed outstanding
      for the purpose of any such computation.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Extraordinary
      Distributions.
      In case
      the Company shall, at any time on or before the Expiration Time, distribute
      to
      all holders of shares of Common Stock (including any such distribution made
      in
      connection with a consolidation or merger in which the Company is the surviving
      corporation) evidences of the Company’s indebtedness or assets (excluding cash
      dividends and distributions payable out of consolidated net income or earned
      surplus in accordance with New York law and dividends or distributions payable
      in shares of stock described in paragraph 3(a) of this Warrant Certificate)
      or
      rights, options, or warrants or exchangeable or convertible securities
      containing the right to subscribe for or purchase shares of Common Stock (or
      securities exchangeable for or convertible into shares of Common Stock), then
      the Purchase Price shall be adjusted by multiplying the Purchase Price in effect
      immediately prior to the record date for such distribution by a fraction, of
      which (i) the numerator shall be the Current Market Price per share of Common
      Stock on such record date, less
      the fair
      market value (as determined in good faith by the Board of Directors of the
      Company) of the portion of the evidences of indebtedness or assets so to be
      distributed or of such rights, options or warrants applicable to one share
      of
      Common Stock and (ii) the denominator shall be such Current Market Price per
      share of Common Stock. Such adjustment shall be made whenever any such
      distribution is made, and shall become effective on the date of distribution
      retroactive to the record date for such transaction.

    

    (d) Stock
      Issuances.

    

    (i) If
      the
      Company shall, at any time or from time to time on or before the Expiration
      Time, issue (x) shares of Common Stock, (y) rights, options, warrants or other
      securities entitling the holder thereof to subscribe for, purchase, convert
      to,
      exchange for or otherwise acquire Common Stock or (z) rights, options, warrants
      or other securities entitling the holder thereof to subscribe for, purchase,
      convert to, exchange for or otherwise acquire such convertible or exchangeable
      securities (in each case, other than Excluded Securities (as defined in
      subparagraph 3(d)(iii) of this Warrant Certificate and other than issuances
      that
      result in an adjustment under paragraphs 3(a), 3(b) or 3(c) of this Warrant
      Certificate), without consideration or for a consideration per share of Common
      Stock less than the Purchase Price in effect immediately prior to the issuance
      of such Common Stock or such rights, options, warrants or other securities,
      the
      Purchase Price in effect immediately prior to each such issuance shall forthwith
      be adjusted to a price equal to the quotient obtained by dividing: (A) an amount
      equal to the sum of (I) the total number of shares of Common Stock outstanding
      immediately prior to such issuance (including any shares of Common Stock deemed
      to have been issued pursuant to subclauses (B)(1) and (B)(2) of subparagraph
      3(d)(ii) of this Warrant Certificate), multiplied
      by the
      Purchase Price in effect immediately prior to such issuance, plus
      (II) the
      consideration received by the Company upon such issuance, by (B) the total
      number of shares of Common Stock outstanding (including any shares of Common
      Stock deemed to have been issued pursuant to subclauses (B)(1) and (B)(2) of
      subparagraph 3(d)(ii) of this Warrant Certificate).

    (ii) For
      the
      purposes of any adjustment of the Purchase Price pursuant to this paragraph
      3(d), the following provisions shall be applicable:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (A) In
      the
      case of the issuance of Common Stock for a consideration in whole or in part
      other than cash, the consideration other than cash shall be deemed to be the
      fair market value thereof as determined in good faith by the Board of Directors
      of the Company, irrespective of any accounting treatment; and

    (B) In
      the
      case of (x) the issuance of rights, options or warrants entitling the holder
      thereof to subscribe for, purchase or otherwise acquire Common Stock, (y)
      securities convertible into or exchangeable for Common Stock or (z) rights,
      options, warrants or other securities convertible into or exchangeable for
      such
      convertible or exchangeable securities -

    (1) the
      aggregate maximum number of shares of Common Stock deliverable upon exercise
      of
      such rights, options or warrants entitling the holder thereof to subscribe
      for,
      purchase or otherwise acquire Common Stock shall be deemed to have been issued
      at the time such rights, options or warrants were issued and for a consideration
      equal to the consideration (determined in the manner provided in clause (A)
      of
      this subparagraph 3(d)(ii)), if any, received by the Company upon the issuance
      of such rights, options or warrants plus
      the
      minimum purchase price provided in such rights, options or warrants for the
      Common Stock covered thereby;

    (2) the
      aggregate maximum number of shares of Common Stock deliverable upon conversion
      of or in exchange for any such convertible or exchangeable securities or upon
      the exercise of rights, options or warrants to subscribe for, purchase or
      otherwise acquire such convertible or exchangeable securities and subsequent
      conversion or exchange thereof shall be deemed to have been issued at the time
      such rights, options, warrants or securities were issued and for a consideration
      equal to the consideration received by the Company for any such rights, options,
      warrants and securities (excluding any cash received on account of accrued
      interest or accrued dividends), plus
      the
      consideration, if any, to be received by the Company upon the conversion or
      exchange of such securities or the exercise of any related rights, options
      or
      warrants (the consideration in each case to be determined in the manner provided
      in clause (A) of this subparagraph 3(d)(ii);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (3) on
      any
      change in the number of shares of Common Stock deliverable upon exercise of
      any
      such rights, options or warrants or conversions of or exchanges for such
      convertible or exchangeable securities or any change in the consideration to
      be
      received by the Company upon the exercise of any such rights, options or
      warrants or conversions of or exchanges for such convertible or exchangeable
      securities, other than a change resulting from the anti-dilution provisions
      thereof, the Purchase Price shall forthwith be readjusted to such Purchase
      Price
      as would have obtained had the adjustment made upon the issuance of such rights,
      options, warrants or securities not converted prior to such change been made
      upon the basis of such change; and

    (4) on
      the
      expiration of any such rights, options or warrants, the termination of any
      such
      rights to convert or exchange or the expiration of any rights, options or
      warrants related to such convertible or exchangeable securities, the Purchase
      Price shall forthwith be readjusted to such Purchase Price as would have
      obtained had the adjustment made upon the issuance of such rights, options,
      warrants or securities or rights, options or warrants related to such securities
      been made upon the basis of the issuance of only the number of shares of Common
      Stock actually issued upon exercise of such rights, options or warrants, upon
      the conversion or exchange of such securities or upon the exercise of the
      rights, options or warrants related to such securities and subsequent conversion
      or exchange thereof.

    (iii) For
      the
      purposes of this paragraph 3(d), the term “Excluded Securities” shall mean (A)
      shares of Common Stock issuable upon exercise of the rights, options and
      warrants of the Company outstanding as of the Commencement Date, (B) shares
      of
      Common Stock issuable under the Company’s 1995 Stock Option Plan, 1999 Incentive
      Stock Option Plan and 2004 Equity Incentive Plan and (C) any securities of
      the
      Company issued by the Company to any party in connection with an Equity
      Financing with respect to a Transaction (as such terms are defined in the letter
      agreement, dated March __, 2006, between Capitalink, L.C. and the
      Company).

    

    (e) Current
      Market Price Defined.
      For the
      this Warrant Certificate, the “Current Market Price” (the “Current Market
      Price”) on any date shall be deemed to be the average per share daily Closing
      Price of the shares of Common Stock for 20
      consecutive trading days ending five trading days before the date in
      question.

    

    (f) Closing
      Price Defined.
      For
      purposes of this Warrant Certificate, the term “Closing Price” of the shares of
      Common Stock for a day or days shall mean:

    

    (i) if
      the
      shares of Common Stock are listed or admitted for trading on a national
      securities exchange, the last reported sales price or, in case no such reported
      sale takes place on such day or days, the average of the reported closing bid
      and asked prices, in either case on the principal national securities exchange
      on which the shares of the Common Stock are listed or admitted for trading,
      or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) if
      the
      shares of Common Stock are not listed or admitted for trading on a national
      securities exchange,

    (A) the
      last
      transaction price for the Common Stock on The Nasdaq Stock Market (“Nasdaq”) or,
      in the case no such reported transaction takes place on such day or days, the
      average of the reported closing bid and asked prices thereof quoted on
      Nasdaq,

    (B) if
      the
      shares of Common Stock are not quoted on Nasdaq, the average of the closing
      bid
      and asked prices of the Common Stock as quoted on the Over-The-Counter Bulletin
      Board maintained by the NASD, Inc. (the “Bulletin Board”), or

    (C) if
      the
      shares of Common Stock are not quoted on Nasdaq nor on the Bulletin Board,
      the
      average of the closing bid and asked prices of the common stock in the
      over-the-counter market, as reported by The Pink Sheets, LLC, or an equivalent
      generally accepted reporting service, or

    (iii) if
      on any
      such day or days the shares of Common Stock are not listed on a national
      securities exchange nor quoted on Nasdaq, on the Bulletin Board or by The Pink
      Sheets, LLC, the fair market value of the shares of Common Stock on such day
      or
      days, as determined in good faith by the Board of Directors of the
      Company.

    

    (g) Capital
      Reorganizations and Other Reclassifications.
      In case
      of any capital reorganization of the Company, or of any reclassification of
      the
      shares of Common Stock (other than a reclassification, subdivision or
      combination of shares of Common Stock referred to in paragraph 3(a) of this
      Warrant Certificate), or in case of the consolidation of the Company with,
      or
      the merger of the Company with, or merger of the Company into, any other
      corporation (other than a reclassification of the shares of Common Stock
      referred to in paragraph 3(a) of this Warrant Certificate or a consolidation
      or
      merger which does not result in any reclassification or change of the
      outstanding shares of Common Stock) or of the sale of the properties and assets
      of the Company as, or substantially as, an entirety to any other corporation
      or
      entity occurring on or before the Expiration Time, each Warrant shall, after
      such capital reorganization, reclassification of shares of Common Stock,
      consolidation, merger, or sale, be exercisable, upon the terms and conditions
      specified in this Warrant Certificate, for the kind, amount and number of shares
      or other securities, assets, or cash to which a holder of the number of shares
      of Common Stock purchasable (at the time of such capital reorganization,
      reclassification of shares of Common Stock, consolidation, merger or sale)
      upon
      exercise of such Warrant would have been entitled to receive upon such capital
      reorganization, reclassification of shares of Common Stock, consolidation,
      merger, or sale; and in any such case, if necessary, the provisions set forth
      in
      this section 3 with respect to the rights and interests thereafter of the
      Warrantholder shall be appropriately adjusted so as to be applicable, as nearly
      equivalent as possible, to any shares or other securities, assets, or cash
      thereafter deliverable on the exercise of the Warrants. The Company shall not
      effect any such consolidation, merger, or sale, unless prior to or
      simultaneously with the consummation thereof the successor corporation or entity
      (if other than the Company) resulting from such consolidation or merger or
      the
      corporation or entity purchasing such assets or other appropriate corporation
      or
      entity shall assume, by written instrument, the obligation to deliver to the
      Warrantholder such shares, securities, assets, or cash as, in accordance with
      the foregoing provisions, such holders may be entitled to purchase and the
      other
      obligations hereunder. The subdivision or combination of shares of Common Stock
      at any time outstanding into a greater or lesser number of shares shall not
      be
      deemed to be a reclassification of the shares of Common Stock for purposes
      of
      this paragraph 3(g).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (h) Minimum
      Adjustment.
      Except
      as hereinafter provided, no adjustment of the Purchase Price hereunder shall
      be
      made if such adjustment results in a change of the Purchase Price then in effect
      of less than one cent ($.01) per share. Any adjustment of less than one cent
      ($.01) per share of any Purchase Price shall be carried forward and shall be
      made at the time of and together with any subsequent adjustment which, together
      with adjustment or adjustments so carried forward, amounts to one cent ($.01)
      per share or more. However, upon exercise of this Warrant Certificate, the
      Company shall make all necessary adjustments (to the nearest cent) not
      theretofore made to the Purchase Price up to and including the effective date
      upon which this Warrant Certificate is exercised.

    

    (i) Notice
      of Adjustments.
      Whenever
      the Purchase Price shall be adjusted pursuant to this section 3, the Company
      shall promptly deliver a certificate signed by the President or a Vice President
      and by the Chief Financial Officer, Treasurer or an Assistant Treasurer or
      the
      Secretary or an Assistant Secretary of the Company, setting forth, in reasonable
      detail, the event requiring the adjustment, the amount of the adjustment, the
      method by which such adjustment was calculated (including a description of
      the
      basis on which the Board of Directors of the Company made any determination
      hereunder), by first class mail postage prepaid to each
      Warrantholder.

    

    (j) Adjustments
      to Other Securities.
      In the
      event that at any time, as a result of an adjustment made pursuant to this
      section 3, the Warrantholder shall become entitled to purchase any shares or
      securities of the Company other than the shares of Common Stock, thereafter
      the
      number of such other shares or securities so purchasable upon exercise of each
      Warrant and the purchase price for such shares or securities shall be subject
      to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      possible to the provisions with respect to the shares of Common Stock contained
      in paragraphs 3(a), 3(b), 3(c), 3(d) and 3(g) of this Warrant
      Certificate.

    

    (k) Deferral
      of Issuance of Additional Shares in Certain Circumstances.
      In any
      case in which paragraph 3(b) of this Warrant Certificate shall require that
      an
      adjustment in the Purchase Price be made effective as of a record date for
      a
      specified event, the Company may elect to defer until the occurrence of such
      event issuing to the holder of a Warrant exercised after such record date the
      shares of Common Stock, if any, issuable upon such exercise over and above
      the
      Warrant Shares, if any, issuable upon such exercise on the basis of the Purchase
      Price in effect prior to such adjustment; provided,
      however,
      that the
      Company shall deliver as soon as practicable to such holder a due bill or other
      appropriate instrument provided by the Company evidencing such holder’s right to
      receive such additional shares of Common Stock upon the occurrence of the event
      requiring such adjustment.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4. Definition
      of Common Stock.
      The
      Common Stock issuable upon exercise of the Warrants shall be the Common Stock
      as
      constituted on the Commencement Date, except as otherwise provided in section
      3
      of this Warrant Certificate.

    

    5. Replacement
      of Warrant Certificates.
      If this
      Warrant Certificate shall be lost, stolen, mutilated or destroyed, the Company
      shall, on such terms as to indemnity or otherwise as the Company may in the
      Company’s discretion reasonably impose, issue a new certificate of like tenor or
      date representing in the aggregate the right to subscribe for and purchase
      the
      number of shares of Common Stock which may be subscribed for and purchased
      hereunder. Any such new certificate shall constitute an original contractual
      obligation of the Company, whether or not the allegedly lost, stolen, mutilated
      or destroyed Warrant Certificate shall be at any time enforceable by
      anyone.

    

    6. Registration.
      This
      Warrant Certificate, as well as all other warrant certificates representing
      Warrants shall be numbered and shall be registered in a register (the “Warrant
      Register”) maintained at the Company Offices as they are issued. The Warrant
      Register shall list the name, address and Social Security or other federal
      taxpayer identifying number, if any, of all Warrantholders. The Company shall
      be
      entitled to treat the Warrantholder as set forth in the Warrant Register as
      the
      owner in fact of the Warrants as set forth therein for all purposes and shall
      not be bound to recognize any equitable or other claim to or interest in such
      Warrants on the part of any other person, and shall not be liable for any
      registration of transfer of Warrants that are registered or to be registered
      in
      the name of a fiduciary or the nominee of a fiduciary unless made with the
      actual knowledge that a fiduciary or nominee is committing a breach of trust
      in
      requesting such registration of transfer, or with such knowledge of such facts
      that its participation therein amounts to bad faith. 

    

    7. Transfer.

    

    (a) Subject
      to
      paragraph 7(b) of this Warrant Certificate, the Warrantholder may transfer
      or
      assign the Warrants evidenced by this Warrant Certificate, in whole or in part,
      to any officer, director, principal, member, equity owner, employee, consultant
      or affiliate of the Warrantholder by surrendering this Warrant Certificate,
      with
      the Assignment Form, substantially in the form provided herein, completed and
      duly executed by the Warrantholder or by the Warrantholder’s duly authorized
      attorney-in-fact, at the Company Offices. The Company shall execute and deliver
      a new Warrant Certificate in the name of the assignee or assignees set forth
      in
      the Assignment Form and this Warrant Certificate shall promptly be canceled.
      If
      fewer than all of the Warrants are assigned, the Company shall execute and
      deliver to the Warrantholder a new Warrant Certificate (dated as of the date
      of
      this Warrant Certificate) evidencing the balance of the Warrants that remain
      exercisable by the Warrantholder.

    

    (b) NEITHER
      THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES OF COMMON
      STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS HAVE
      BEEN
      ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON
      EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES
      AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED,
      PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
      STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER SECURITIES UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR
      AN
      OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH WARRANTS AND SUCH SHARES
      OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
      ACT AND SUCH STATE SECURITIES LAWS.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) In
      the
      event of a transfer of any Warrants in accordance with this section 7, the
      Company shall, upon the surrender of this Warrant Certificate with the
      Assignment Form completed, dated and signed, execute and deliver to the
      transferee a new warrant certificate, substantially in form to this Warrant
      Certificate, evidencing the number of Warrants so transferred to such transferee
      and naming the transferee as the Warrantholder.

    

    8. Exchange
      of Warrant Certificates.
      This
      Warrant Certificate may be exchanged for another certificate or certificates
      entitling the Warrantholder thereof to purchase a like aggregate number of
      Warrant Shares as this Warrant Certificate entitles such Warrantholder to
      purchase. A Warrantholder desiring to so exchange this Warrant Certificate
      shall
      make such request in writing delivered to the Company, and shall surrender
      this
      Warrant Certificate therewith. Thereupon, the Company shall execute and deliver
      to the person entitled thereto a new certificate or certificates, as the case
      may be, as so requested.

    

    9. Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed given when delivered in person, against written receipt therefor, or
      two
      days after being sent, by registered or certified mail, postage prepaid, return
      receipt requested, and, if to the Warrantholder, at such address as is shown
      on
      the Warrant Register or as may otherwise may have been furnished to the Company
      in writing in accordance with this section 9 by the Warrantholder and, if to
      the
      Company, at the Company Offices or such other address as the Company shall
      give
      notice thereof to the Warrantholder in accordance with this section
      9.

    

    10. Registration
      Rights.

    

    (a) Defined
      Terms.
      As used
      in this section 10, terms defined elsewhere herein shall have their assigned
      meanings and each of the following terms shall have the following meanings
      (such
      definitions to be applicable to both the plural and singular of the terms
      defined):

    

    (i) Registerable
      Securities.
      The term
“Registerable Securities” shall mean any of the Warrant Shares or other
      securities issuable upon exercise of any of the Warrants originally issued
      to
      Capitalink, L.C. as of the Commencement Date and represented, in whole or part,
      by this Warrant Certificate. For the purposes of this Section 10, securities
      will cease to be Registerable Securities when:

    (A)
      a
      registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), covering such Registerable Securities has been declared
      effective and (1) such Registerable Securities have been disposed of pursuant
      to
      such effective registration statement or (2) such registration statement has
      remained effective for 270 consecutive days, or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (B)
      such
      Registerable Securities are distributed to the public pursuant to the Securities
      Act or pursuant to an exemption from the registration requirements of the
      Securities Act, including, without limitation, Rules 144 and 144A promulgated
      under the Securities Act and the Company has delivered new certificates or
      other
      evidences of ownership for such securities which are not subject to any stop
      transfer order or other restriction on transfer;

    (ii) Rightsholders.
      The term
“Rightsholders” shall include the Warrantholder, all successors and assigns of
      the Warrantholders and all transferees of Registerable Securities where such
      transfer affirmatively includes the transfer and assignment of the rights of
      the
      transferor-Warrantholder under this Warrant Certificate with respect to the
      transferred Registerable Securities and such transferee agrees in writing to
      assume all of the transferor-Warrantholder’s agreements, obligations and
      liabilities under this section 10 with respect to the transferred Registerable
      Securities; and

    (iii) Interpretations
      of Terms.
      The
      words “hereof,” “herein” and “hereunder” and words of similar import when used
      in this section 10 shall refer to this section 10 as a whole and not to any
      particular provision of this section 10, and subsection, paragraph, clause,
      schedule and exhibit references are to this section 10 unless otherwise
      specified.

    

    (b) Piggy-Back
      Registration.

    

    (i) Piggy-Back
      Rights.
      If, at
      any time on or prior to the first anniversary of the Expiration Time, the
      Company (or any successor of the Company, by merger or otherwise) proposes
      to
      file a registration statement under the Securities Act with respect to an
      offering by the Company or any other party of any class of equity security
      similar to any Registerable Securities (other than a registration statement
      on
      Form S-4 or S-8 or any successor form or a registration statement filed solely
      in connection with an exchange offer, a business combination transaction or
      an
      offering of securities solely to the existing shareholders or employees of
      the
      Company), then the Company, on each such occasion, shall give written notice
      (each, a “Company Piggy-Back Notice”) of such proposed filing to all of the
      Rightsholders owning Registerable Securities at least twenty days before the
      anticipated filing date of such registration statement, and such Company
      Piggy-Back Notice also shall be required to offer to such Rightsholders the
      opportunity to register such aggregate number of Registerable Securities as
      each
      such Rightsholder may request. Each such Rightsholder shall have the right,
      exercisable for the fifteen days immediately following the giving of a Company
      Piggy-Back Notice, to request, by written notice (each, a “Holder Notice”) to
      the Company, the inclusion of all or any portion of the Registerable Securities
      of such Rightsholders in such registration statement. The Company shall use
      commercially best efforts to cause the managing underwriter(s) of a proposed
      underwritten offering to permit the inclusion of the Registerable Securities
      which were the subject of all Holder Notices in such underwritten offering
      on
      the same terms and conditions as any similar securities of the Company included
      therein. Notwithstanding anything to the contrary contained in this subparagraph
      10(b)(i), if the managing underwriter(s) of such underwritten offering or any
      proposed underwritten offering delivers a written opinion to the Rightsholders
      of Registerable Securities which were the subject of all Holder Notices that
      the
      total amount and kind of securities which they, the Company and any other person
      intend to include in such offering is such as to materially and adversely affect
      the success of such offering, then the amount of securities to be offered for
      the accounts of such Rightsholders and persons other than the Company shall
      be
      eliminated or reduced pro rata (based on the amount of securities owned by
      such
      Rightsholders and other persons which carry registration rights) to the extent
      necessary to reduce the total amount of securities to be included in such
      offering to the amount recommended by such managing underwriter(s) in the
      managing underwriter’s written opinion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) Number
      of Piggy-Back Registrations; Expenses.
      The
      Rightsholders shall be entitled, in the aggregate, to two Piggy-Back
      Registrations. Subject to the provisions of paragraph 10(d) of this Warrant
      Certificate, the Company will pay all Registration Expenses in connection with
      any registration of Registerable Securities effected pursuant to this paragraph
      10(b), but the Company shall not be responsible for the payment of any
      underwriter’s discount, commission or selling concession in connection
      therewith.

    (iii) Withdrawal
      or Suspension of Registration Statement.
      The
      Company shall have the absolute right, whether before or after the giving of
      a
      Company Piggy-Back Notice or Holder Notice, to determine not to file a
      registration statement to which the Rightsholders shall have the right to
      include their Registerable Securities therein pursuant to this paragraph 10(b),
      to withdraw such registration statement or to delay or suspend pursuing the
      effectiveness of such registration statement. In the event of such a
      determination after the giving of a Company Piggy-Back Notice, the Company
      shall
      give notice of such determination to all Rightsholders and, thereupon, (A)
      in
      the case of a determination not to register or to withdraw such registration
      statement, the Company shall be relieved of its obligation under this paragraph
      10(b) to register any of the Registerable Securities in connection with such
      registration and (B) in the case of a determination to delay the registration,
      the Company shall be permitted to delay or suspend the registration of
      Registerable Securities pursuant to this paragraph 10(b) for the same period
      as
      the delay in the registration of such other securities. No registration effected
      under this paragraph 10(b) shall relieve the Company of its obligation to effect
      any registration upon demand otherwise granted to a Rightsholder under any
      other
      agreement with the Company.

    

    (c) Registration
      Procedures.

    

    (i) Obligations
      of the Company.
      The
      Company will, in connection with any registration pursuant to paragraph 10(b)
      of
      this Warrant Certificate, as expeditiously as possible:

    (A) prepare
      and file with the Commission a registration statement under the Securities
      Act
      on any appropriate form chosen by the Company, in the Company’s sole discretion,
      which shall be available for the sale of all Registerable Securities in
      accordance with the intended method(s) of distribution thereof set forth in
      all
      applicable Holder Notices, and use the Company’s commercially best efforts to
      cause such registration statement to become effective as soon thereafter as
      reasonably practicable but in no event more than 100 days after receipt of
      such
      notices or requests; provided,
      that, at
      least five business days before filing with the Commission of such registration
      statement, the Company shall furnish to each Rightsholder whose Registerable
      Securities are included therein draft copies of such registration statement,
      including all exhibits thereto and documents incorporated by reference therein,
      and, upon the reasonable request of any such Rightsholder, shall continue to
      provide drafts of such registration statement until filed, and, after such
      filing, the Company shall, as diligently as practicable, provide to each such
      Rightsholders such number of copies of such registration statement, each
      amendment and supplement thereto, the prospectus included in such registration
      statement (including each preliminary prospectus), all exhibits thereto and
      documents incorporated by reference therein and such other documents as such
      Rightsholder may reasonably request in order to facilitate the disposition
      of
      the Registerable Securities owned by such Rightsholder and included in such
      registration statement; provided,
      further,
      the
      Company shall modify or amend the registration statement as it relates to such
      Rightsholder as reasonably requested by such Rightsholder on a timely basis,
      and
      shall reasonably consider other changes to the registration statement (but
      not
      including any exhibit or document incorporated therein by reference) reasonably
      requested by such Rightsholder on a timely basis, in light of the requirements
      of the Securities Act and any other applicable laws and regulations; and
provided,
      further,
      that the
      obligation of the Company to effect such registration and/or cause such
      registration statement to become effective, may be postponed for (1) such period
      of time when the financial statements of the Company required to be included
      in
      such registration statement are not available (due solely to the fact that
      such
      financial statements have not been prepared in the regular course of business
      of
      the Company) or (2) any other bona
      fide
      corporate
      purpose, but then only for a period not to exceed 60 calendar days;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (B) prepare
      and file with the Commission such amendments and post-effective amendments
      to a
      registration statement as may be necessary to keep such registration statement
      effective for up to nine months; and cause the related prospectus to be
      supplemented by any required prospectus supplement, and as so supplemented
      to be
      filed to the extent required pursuant to Rule 424 promulgated under the
      Securities Act, during such nine-month period; and otherwise comply with the
      provisions of the Securities Act with respect to the disposition of all
      Registerable Securities covered by such registration statement during the
      applicable period in accordance with the intended method(s) of disposition
      of
      such Registerable Securities set forth in such registration statement,
      prospectus or supplement to such prospectus;

    (C) notify
      the
      Rightsholders whose Registerable Securities are included in such registration
      statement and the managing underwriter(s), if any, of an underwritten offering
      of any of the Registerable Securities included in such registration statement,
      and confirm such advice in writing, (1) when a prospectus or any prospectus
      supplement or post-effective amendment has been filed, and, with respect to
      a
      registration statement or any post-effective amendment, when the same has become
      effective, (2) of any request by the Commission for amendments or supplements
      to
      a registration statement or related prospectus or for additional information,
      (3) of the issuance by the Commission of any stop order suspending the
      effectiveness of a registration statement or the initiation of any proceedings
      for that purpose, (4) if at any time the representations and warranties of
      the
      Company contemplated by subclause (J)(1) of subparagraph 10(c)(i) of this
      Warrant Certificate cease to be true and correct, (5) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      of any of the Registerable Securities for sale in any jurisdiction or the
      initiation or threatening of any proceeding for such purpose and (6) of the
      happening of any event which makes any statement made in the registration
      statement, the prospectus or any document incorporated therein by reference
      untrue or which requires the making of any changes in the registration statement
      or prospectus so that such registration statement, prospectus or document
      incorporated by reference will not contain any untrue statement of material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein not misleading;

    (D) make
      commercially best efforts to obtain the withdrawal of any order suspending
      the
      effectiveness of such registration statement at the earliest possible moment
      and
      to prevent the entry of such an order;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (E) use
      commercially best efforts to register or qualify the Registerable Securities
      included in such registration statement under such other securities or blue
      sky
      laws of such jurisdictions as any Rightsholder whose Registerable Securities
      are
      included in such registration statement reasonably requests in writing and
      do
      any and all other acts and things which may be necessary or advisable to enable
      such Rightsholder to consummate the disposition in such jurisdictions of such
      Registerable Securities; provided,
      that the
      Company will not be required to (1) qualify generally to do business in any
      jurisdiction where it would not otherwise be required to qualify but for this
      clause (E), (2) subject itself to taxation in any such jurisdiction or (3)
      take
      any action which would subject it to general service of process in any such
      jurisdiction;

    (F) make
      available for inspection by each Rightsholder whose Registerable Securities
      are
      included in such registration, any underwriter(s) participating in any
      disposition pursuant to such registration statement, and any representative,
      agent or employee of or attorney or accountant retained by any such Rightsholder
      or underwriter(s) (collectively, the “Inspectors”), all financial and other
      records, pertinent corporate documents and properties of the Company
      (collectively, the “Records”) as shall be reasonably necessary to enable them to
      exercise their due diligence responsibility (or establish a due diligence
      defense), and cause the officers, directors and employees of the Company to
      supply all information reasonably requested by any of the Inspectors in
      connection with such registration statement; provided,
      that
      records which the Company determines, in good faith, to be confidential and
      which it notifies the Inspectors are confidential shall not be disclosed by
      the
      Inspectors, unless (1) the release of such Records is ordered pursuant to a
      subpoena or other order from a court of competent jurisdiction or (2) the
      disclosure of such Records is required by any applicable law or regulation
      or
      any governmental regulatory body with jurisdiction over such Rightsholder or
      underwriter; provided,
      further,
      that
      such Rightsholder or underwriter(s) agree that such Rightsholder or
      underwriter(s) will, upon learning the disclosure of such Records is sought
      in a
      court of competent jurisdiction, give notice to the Company and allow the
      Company, at the Company’s expense, to undertake appropriate action to prevent
      disclosure of the Records deemed confidential;

    (G) cooperate
      with the Rightsholders whose Registerable Securities are included in such
      registration statement and the managing underwriter(s), if any, to facilitate
      the timely preparation and delivery of certificates representing Registerable
      Securities to be sold thereunder, not bearing any restrictive legends, and
      enable such Registerable Securities to be in such denominations and registered
      in such names as such Rightsholder or any managing underwriter(s) may reasonably
      request at least two business days prior to any sale of Registerable
      Securities;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (H) comply
      with all applicable rules and regulations of the Commission and promptly make
      generally available to its security holders an earnings statement covering
      a
      period of twelve months commencing, (1) in an underwritten offering, at the
      end
      of any fiscal quarter in which Registerable Securities are sold to
      underwriter(s), or (2) in a non-underwritten offering, with the first month
      of
      the Company’s first fiscal quarter beginning after the effective date of such
      registration statement, which earnings statement in each case shall satisfy
      the
      provisions of Section 10(a) of the Securities Act;

    (I) provide
      a
      CUSIP number for all Registerable Securities not later than the effective date
      of the registration statement relating to the first public offering of
      Registerable Securities of the Company pursuant hereto;

    (J) enter
      into
      such customary agreements (including an underwriting agreement in customary
      form) and take all such other actions reasonably requested by the Rightsholders
      holding a majority of the Registerable Securities included in such registration
      statement or the managing underwriter(s) in order to expedite and facilitate
      the
      disposition of such Registerable Securities and in such connection, whether
      or
      not an underwriting agreement is entered into and whether or not the
      registration is an underwritten registration, (1) make such representations
      and
      warranties, if any, to the holders of such Registerable Securities and any
      underwriter(s) with respect to the registration statement, prospectus and
      documents incorporated by reference, if any, in form, substance and scope as
      are
      customarily made by issuers to underwriter(s) in underwritten offerings and
      confirm the same if and when requested, (2) obtain opinions of counsel to the
      Company and updates thereof addressed to each such Rightsholder and the
      underwriter(s), if any, with respect to the registration statement, prospectus
      and documents incorporated by reference, if any, covering the matters
      customarily covered in opinions requested in underwritten offerings and such
      other matters as may be reasonably requested by such Rightsholders and
      underwriter(s), (3) obtain a “cold comfort” letter and updates thereof from the
      Company’s independent certified public accountants addressed to such
      Rightsholders and to the underwriter(s), if any, which letters shall be in
      customary form and cover matters of the type customarily covered in “cold
      comfort” letters by accountants in connection with underwritten offerings, and
      (4) deliver such documents and certificates as may be reasonably requested
      by
      the Rightsholders holding a majority of such Registerable Securities and
      managing underwriter(s), if any, to evidence compliance with any customary
      conditions contained in the underwriting agreement or other agreement entered
      into by the Company; each such action required by this clause (J) shall be
      done
      at each closing under such underwriting or similar agreement or as and to the
      extent required thereunder; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (K) if
      requested by the holders of a majority of the Registerable Securities included
      in such registration statement, use its best efforts to cause all Registerable
      Securities which are included in such registration statement to be listed,
      subject to notice of issuance, by the date of the first sale of such
      Registerable Securities pursuant to such registration statement, on each
      securities exchange, if any, on which securities similar to the Registered
      Securities are listed.

    (ii) Obligations
      of Rightsholders.
      In
      connection with any registration of Registerable Securities of a Rightsholder
      pursuant to paragraph 10(b) of this Warrant Certificate:

    (A) The
      Company may require that each Rightsholder whose Registerable Securities are
      included in such registration statement furnish to the Company such information
      regarding the distribution of such Registerable Securities and such Rightsholder
      as the Company may from time to time reasonably request in writing;

    (B) Each
      Rightsholder, upon receipt of any notice from the Company of the happening
      of
      any event of the kind described in subclauses (2), (3), (5) and (6) of clause
      10(c)(i)(C) of this Warrant Certificate, shall forthwith discontinue disposition
      of Registerable Securities pursuant to the registration statement covering
      such
      Registerable Securities until such Rightsholder’s receipt of the copies of the
      supplemented or amended prospectus contemplated by subclause (1) of said clause
      10(c)(i)(C), or until such Rightsholder is advised in writing (the “Advice”) by
      the Company that the use of the applicable prospectus may be resumed, and until
      such Rightsholder has received copies of any additional or supplemental filings
      which are incorporated by reference in or to be attached to or included with
      such prospectus, and, if so directed by the Company, such Rightsholder will
      deliver to the Company (at the expense of the Company) all copies, other than
      permanent file copies then in the possession of such Rightsholder, of the
      current prospectus covering such Registerable Securities at the time of receipt
      of such notice; the Company shall have the right to demand that such
      Rightsholder or other holder verify its agreement to the provisions of this
      clause (B) in any Holder Notice of the Rightsholder or in a separate document
      executed by the Rightsholder; and

    (C)
       Each
      Rightsholder agrees that in a underwritten offering it will not, without the
      consent of the managing underwriter, dispose of or offer any securities of
      the
      Company for the period of restrictions on the sale or disposal of securities
      of
      the Company imposed, or consented to, by any principal shareholder of the
      Company.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Registration
      Expenses.
      All
      expenses incident to the performance of or compliance with this Warrant
      Certioficate by the Company, including, without imitation, all registration
      and
      filing fees of the Commission, NASD, Inc. and other agencies, fees and expenses
      of compliance with securities or blue sky laws (including reasonable fees and
      disbursements of counsel in connection with blue sky qualifications of the
      Registerable Securities), rating agency fees, printing expenses, messenger
      and
      delivery expenses, internal expenses (including, without limitation, all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the fees and expenses incurred in connection with the
      listing, if any, of the Registerable Securities on any securities exchange
      and
      fees and disbursements of counsel for the Company and the Company’s independent
      certified public accountants (including the expenses of any special audit or
      “cold comfort” letters required by or incidental to such performance),
      Securities Act or other liability insurance (if the Company elects to obtain
      such insurance), the fees and expenses of any special experts retained by the
      Company in connection with such registration and the fees and expenses of any
      other person retained by the Company (but not including any underwriting
      discounts or commissions attributable to the sale of Registerable Securities
      or
      other out-of-pocket expenses of the Rightsholders, or the agents who act on
      their behalf, unless reimbursement is specifically approved by the Company)
      will
      be borne by the Company. All such expenses are herein referred to as
“Registration Expenses.”

    

    (e) Indemnification:
      Contribution.

    

    (i) Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless, to the full extent permitted
      by
      law, each Rightsholder, its officers and directors and each person who controls
      such Rightsholder (within the meaning of the Securities Act), if any, and any
      agent thereof against all losses, claims, damages, liabilities and expenses
      incurred by such party pursuant to any actual or threatened suit, action,
      proceeding or investigation (including reasonable attorney’s fees and expenses
      of investigation) arising out of or based upon any untrue or alleged untrue
      statement of a material fact contained in any registration statement, prospectus
      or preliminary prospectus or any omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of a prospectus, in the light of the circumstances under
      which they were made) not misleading, except insofar as the same arise out
      of or
      are based upon, any such untrue statement or omission based upon information
      with respect to such Rightsholder furnished in writing to the Company by such
      Rightsholder expressly for use therein.

    (ii) Indemnification
      by Rightsholder.
      In
      connection with any registration statement in which a Rightsholder is
      participating, each such Rightsholder will be required to furnish to the Company
      in writing such information with respect to such Rightsholder as the Company
      reasonably requests for use in connection with any such registration statement
      or prospectus, and each Rightsholder agrees to the extent it is such a holder
      of
      Registerable Securities included in such registration statement, and each other
      such holder of Registerable Securities included in such Registration Statement
      will be required to agree, to indemnify, to the full extent permitted by law,
      the Company, the directors and officers of the Company and each person who
      controls the Company (within the meaning of the Securities Act) and any agent
      thereof, against any losses, claims, damages, liabilities and expenses
      (including reasonable attorney’s fees and expenses of investigation incurred by
      such party pursuant to any actual or threatened suit, action, proceeding or
      investigation arising out of or based upon any untrue or alleged untrue
      statement of a material fact or any omission or alleged omission of a material
      fact necessary, to make the statements therein (in the case of a prospectus,
      in
      the light of the circumstances under which they are made) not misleading, to
      the
      extent, but only to the extent, that such untrue statement or omission is based
      upon information relating to such Rightsholder or other holder furnished in
      writing to the Company expressly for use therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iii) Conduct
      of Indemnification Proceedings.
      Promptly
      after receipt by an indemnified party under this paragraph 10(e) of written
      notice of the commencement of any action, proceeding, suit or investigation
      or
      threat thereof made in writing for which such indemnified party may claim
      indemnification or contribution pursuant to this Warrant Certificate, such
      indemnified party shall notify in writing the indemnifying party of such
      commencement or threat; but the omission so to notify the indemnifying party
      shall not relieve the indemnifying party from any liability which the
      indemnifying party may have to any indemnified party (A) hereunder, unless
      the
      indemnifying party is actually prejudiced thereby, or (B) otherwise than under
      this paragraph 10(e). In case any such action, suit or proceeding shall be
      brought against any indemnified party, and the indemnified party shall notify
      the indemnifying party of the commencement thereof, the indemnifying party
      shall
      be entitled to participate therein and the indemnifying party shall assume
      the
      defense thereof, with counsel reasonably satisfactory to the indemnified party,
      and the obligation to pay all expenses relating thereto. The indemnified party
      shall have the right to employ separate counsel in any such action, suit or
      proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such indemnified party unless (A)
      the
      indemnifying party has agreed to pay such fees and expenses, (B) the
      indemnifying party shall have failed to assume the defense of such action,
      suit
      or proceeding or to employ counsel reasonably satisfactory to the indemnified
      party therein or to pay all expenses relating thereto or (C) the named parties
      to any such action or proceeding (including any impleaded parties) include
      both
      the indemnified party and the indemnifying party and the indemnified party
      shall
      have been advised by counsel that there may be one or more legal defenses
      available to the indemnified party which are different from or additional to
      those available to the indemnifying party and which may result in a conflict
      between the indemnifying party and such indemnified party (in which case, if
      the
      indemnified party notifies the indemnifying party in writing that the
      indemnified party elects to employ separate counsel at the expense of the
      indemnifying party, the indemnifying party shall not have the right to assume
      the defense of such action or proceeding on behalf of the indemnified party;
      it
      being understood, however, that the indemnifying party shall not, in connection
      with any one such action, suit or proceeding or separate but substantially
      similar or related actions, suits or proceedings in the same jurisdiction
      arising out of the same general allegations or circumstances, be liable for
      the
      fees and expenses of more than one separate firm of attorneys at any time for
      the indemnified party, which firm shall be designated in writing by the
      indemnified party).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iv) Contribution.
      If the
      indemnification provided for in this paragraph 10(e) from the indemnifying
      party
      is unavailable to an indemnified party hereunder in respect of any losses,
      claims, damages, liabilities or expenses referred to therein, then the
      indemnifying party, in lieu of indemnifying such indemnified party, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such losses, claims, damages, liabilities or expenses (A) in such proportion
      as is appropriate to reflect the relative benefits received by the indemnifying
      party on the one hand and the indemnified party on the other or (B) if the
      allocation provided by clause (A) above is not permitted by applicable law,
      in
      such proportion as is appropriate to reflect not only the relative benefits
      received by the indemnifying party on the one hand and the indemnified party
      on
      the other but also the relative fault of the indemnifying party and indemnified
      party, as well as any other relevant equitable considerations. The relative
      fault of such indemnifying party and the indemnified parties shall be determined
      by reference to, among other things, whether any action in question, including
      any untrue or alleged untrue statement of a material fact or omission or alleged
      omission to state a material fact, has been made by, or relates to information
      supplied by, such indemnifying party or indemnified parties, and the parties’
relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such action. The amount paid or payable by a party as a result of the
      losses, claims, damages, liabilities and expenses referred to above shall be
      deemed to include, subject to the limitation set forth in subparagraph 10(e)(v)
      of this Warrant Certificate, any legal or other fees or expenses reasonably
      incurred by such party in connection with any investigation or
      proceeding.

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this subparagraph 10(e)(iv) were determined by pro rata allocation
      or by any other method of allocation which does not take into account the
      equitable considerations referred to in clauses (A) and (B) of the immediately
      preceding paragraph. No person guilty of fraudulent misrepresentation (within
      the meaning of Section 10(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation.

    (v) Limitation.
      Anything
      to the contrary contained in this paragraph 10(e) or in paragraph 10(f) of
      this
      Warrant Certificate notwithstanding, no holder of Registerable Securities shall
      be liable for indemnification and contribution payments aggregating an amount
      in
      excess of the maximum dollar amount of the net proceeds received by such holder
      in connection with any sale of Registerable Securities as contemplated
      herein.

    

    (f) Participation
      in Underwritten Registration.
      No
      Rightsholder may participate in any underwritten registration hereunder unless
      such Rightsholder (i) agrees to sell such holder’s securities on the basis
      provided in any underwriting arrangements approved by the persons entitled
      hereunder to approve such arrangements and to comply with Regulation M under
      the
      Exchange Act and (ii) completes and executes all questionnaires, appropriate
      and
      limited powers of attorney, escrow agreements, indemnities, underwriting
      agreements and other documents reasonably required under the terms of such
      underwriting arrangement; provided,
      that all
      such documents shall be consistent with the provisions of paragraph 10(e) of
      this Warrant Certificate.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11. Miscellaneous.
      This
      Warrant Certificate and any term hereof may be changed, waived, discharged
      or
      terminated only by an instrument in writing signed by the party against which
      enforcement of such change, waiver, discharge or termination is sought. This
      Warrant Certificate is deemed to have been delivered in the State of New York
      and shall be construed and enforced in accordance with and governed by the
      laws
      of such State. The headings in this Warrant Certificate are for purposes of
      reference only, and shall not limit or otherwise affect any of the terms
      hereof.

    

    12. Expiration.
      Unless as
      hereinafter provided, the right to exercise the Warrants shall expire at the
      Expiration Time.

    

    13. No
      Rights as Shareholder; Notice to Warrantholder.

    

    (a) Nothing
      contained in this Warrant Certificate shall be constructed as conferring upon
      the Warrantholder the right to vote or to receive distributions or to consent
      to
      or receive notice as a shareholder in respect of any meeting of shareholders
      for
      the election of directors of the Company or any other matter, or any other
      rights whatsoever as shareholder of the Company.

    

    (b) The
      Company shall give notice to the Warrantholder by postage-paid, certified mail,
      return receipt requested, if, at any time prior to the Expiration Time, any
      of
      the following events shall occur:

    

    (i) the
      Company shall authorize the payment of any distributions upon Common Stock
      payable in any securities or authorize the making of any distribution (other
      than a cash distribution subject to the second parenthetical set forth in
      section 3(c) of this Warrant Certificate) to all holders of Common
      Stock;

    (ii) the
      Company shall authorize the issuance to all holders of Common Stock of any
      additional shares of Common Stock or of rights, options or warrants to subscribe
      for or purchase Common Stock or of any other subscription rights, options or
      warrants;

    (iii) a
      dissolution, liquidation or winding up of the Company (including, without
      limitation, a consolidation, merger, or sale or conveyance of the property
      of
      the Company as an entirety or substantially as an entirety); or

    (iv) a
      capital
      reorganization or reclassification of the Common Stock (other than a subdivision
      or combination of the outstanding Common Stock) or any consolidation or merger
      of the Company with or into another corporation (excluding any consolidation
      or
      merger in which the Company is the continuing company and that does not result
      in any reclassification of, or change to, the Common Stock then outstanding)
      or
      in the case of any sale or conveyance to another corporation of the property
      of
      the Company as an entirety or substantially as an entirety.

    

    Such
      giving of notice shall be given (x) at least twenty business days (a day other
      than a Saturday, Sunday or other day on which banks in the State of New York
      are
      authorized by law to remain closed) prior to the date fixed as a record date
      or
      effective date or the date of closing of the Company’s transfer books for the
      determination of the holders entitled to such distribution or subscription
      rights, or for the determination of the holders entitled to vote on such
      proposed merger, consolidation, sale, conveyance, dissolution, liquidation,
      winding up or conversion to corporate or other form. Such notice shall specify
      such record date or the date of closing the transfer books, as the case may
      be.
      In addition, the Company shall provide to Warrantholder, at the same time such
      notice is provided, such information relating to such distribution or
      subscriptions rights, or proposed merger, consolidation, sale, conveyance,
      dissolution, liquidation, winding up or conversion to corporate or other form
      as
      may be reasonablely necessary for Warrantholder to make an informed decision
      whether to exercise Warrantholder’s rights as evidenced by this Warrant
      Certificate.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14. Severability.
      If any
      term or other provision of this Warrant Certificate is invalid, illegal or
      incapable of being enforced by any law or public policy, all other terms and
      provisions of this Warrant Certificate shall nevertheless remain in full force
      and effect so long as the economic or legal substance of the transactions
      contemplated hereby is not affected in any manner materially adverse to either
      the Company or Warrantholder. Upon such determination that any term or other
      provision is invalid, illegal or incapable of being enforced, the Company and
      Warrantholder shall negotiate in good faith to modify this Warrant Certificate
      so as to effect the original intent of the Company and Capitalink, L.C. in
      connection with the issuance of the Warrants, to the greatest extent possible.
      Any provision of this Warrant Certificate held invalid or unenforceable only
      in
      part, degree or in certain jurisdictions will remain in full force and effect
      to
      the extent not held invalid or unenforceable.

    

    

    IN
      WITNESS WHEREOF,
      AFP
      Imaging Corporation has caused this Warrant Certificate to be executed by its
      officer thereunto duly authorized.

    

    

    Dated:
      As
      of March 28, 2006 

     

    AFP
      Imaging Corporation

    

    By:
      ____________________
Donald
      Rabinovitch, President

    

    ATTEST:

    

    

    ______________

    David
      Vozick, Secretary

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXERCISE
      FORM

    

    

    

    Dated:____________,
      20__

    

    TO:
      AFP
      Imaging Corporation

    

    The
      undersigned hereby irrevocably elects to exercise its warrant exercise rights
      evidenced by this Warrant Certificate to the extent of purchasing
      _______________ shares of Common Stock of AFP Imaging Corporation and hereby
      makes payment of the aggregate Purchase Price therefor as follows:

    

    CHOOSE
      AND COMPLETE ONE:

    

    
      	
              G

            	
              Tendering,
                contemporaneous with the delivery of this Warrant Certificate, the
                amount
                of $_____________ in the form of (a) cash or (b) bank cashier’s or
                certified check payable to the order of “AFP Imaging Corporation
                .”

            

    

    

    
      	
              G

            	
              Surrendering
                _________ Warrants evidenced by this Warrant Certificate in accordance
                with paragraph 1(c) of this Warrant
                Certificate.

            

    

     

    INSTRUCTIONS
      FOR REGISTRATION OF STOCK

    (Please
      type or print in block letters)

    
 

    
      	Name:	 
	Taxpayer
Identification
              
Number:	 
	Address:	 
	 	 

    

    

     

    Signature:__________________________________________________

    (Signature
      must conform in all respects to the name of the Warrantholder

    as
      set
      forth on the face of this Warrant Certificate.)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    (Please
      type or print in block letters)

    

    

    FOR
      VALUE
      RECEIVED, _____________________________________

     

    hereby
      sells, assigns and transfers unto:

    

    
      
        	Name:	 
	Taxpayer
Identification
                
Number:	 
	Address:	 
	 	 

      

      
 

    

    this
      Warrant Certificate and the Warrants represented by this Warrant Certificate
      to
      the extent of ________________ Warrants and does hereby irrevocably constitute
      and appoint ___________________________ Attorney-in-Fact, to transfer the same
      on the books of the Company with full power of substitution in the
      premises.

    

    Dated:______________________________
      

    

    

    

    Signature:_________________________________________________

    (Signature
      must conform in all respects to the name of the Warrantholder

    as
      set
      forth on the face of this Warrant Certificate.)Exhibit 10.1

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT, effective as of May 1, 2006 (the "Effective Date"), is made
by and between Digital Fusion, Inc., a Delaware corporation (the "Company") with
its corporate offices at 4940-A Corporate Drive, Huntsville,  Alabama 35805, and
Maria (Toni)  Sepulveda (the  "Executive"),  residing at 8007  Hedgewood  Court,
Fairfax Station, VA 22039.

                                    RECITALS
                                    --------

     WHEREAS,  Company desires to employ  Executive and Executive  desires to be
employed by the Company;

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

                              OPERATIVE PROVISIONS
                              --------------------

1.   Employment; Term.

     (a)  Employment.  Subject to the terms and conditions set forth herein, the
          Company  agrees  to  employ  and  Executive  agrees  to  serve  as the
          Company's  Executive Vice  President of Northeast (NE) Region.  During
          the term of employment,  Executive  shall have such  responsibilities,
          duties and authorities as commensurate  with executive vice presidents
          of similar size, and additionally,  such responsibilities,  duties and
          authorities as may be assigned to the Executive by the Company's Chief
          Operating Officer,  provided,  that, the same is not inconsistent with
          such  position.  Executive  agrees that she will use her full business
          time to promote the interests of the Company and its affiliates and to
          fulfill her duties hereunder.  Nothing in this Agreement shall however
          preclude  Executive  from  engaging,  so long  as,  in the  reasonable
          determination of the Company's Board of Directors,  such activities do
          not interfere  with the  execution of her duties and  responsibilities
          hereunder,  in  charitable  and community  affairs,  from managing any
          passive  investment  made  by  Executive  in  publicly  traded  equity
          securities or other property  (provided,  that, no such investment may
          exceed 5% of the equity of any entity,  without the prior  approval of
          the Company's  Board of  Directors)  or from  serving,  subject to the
          prior  approval of the Company's  Board of  Directors,  as a member of
          boards  of  directors  or  as a  trustee  of  any  other  corporation,
          association or entity (provided, that, no such prior approval shall be
          required  for any such  boards  on  which  Executive  shall  currently
          serve).  For purposes of the preceding  sentence,  any approval of the
          Company's Board of Directors required herein shall not be unreasonably
          withheld.

     (b)  Term.  Unless  sooner  terminated  pursuant  to Section 3, the term of
          Executive's  employment  pursuant to this Agreement  shall commence on
          the Effective Date and shall  continue  thereafter for a period of two
          years  (the  "Term").   Executive  and  the  Company   understand  and
          acknowledge that Executive's  employment with the Company  constitutes
          "at-will"  employment.  Subject to the Company's obligation to provide

                                       1
<PAGE>

          severance  benefits as  specified  herein,  Executive  and the Company
          acknowledge that this employment relationship may be terminated at any
          time, upon written notice to the other party, with or without Cause or
          Good Reason, as those terms are defined below, at the option of either
          the Company or Executive.

2.   Compensation.  During the employment term under this Agreement, the Company
shall compensate Executive as follows:

     (a)  Base Salary.  Subject to  adjustment  as set forth below,  the Company
          will pay Executive while she is employed hereunder, an annualized base
          compensation of not less than Eighty Thousand Dollars ($80,000.00) per
          year,  payable in accordance  with Company's usual payroll policy (the
          "Base  Salary").   The  Company  will  review   annually   Executive's
          performance and compensation.

     (b)  Performance   Bonus.   Executive  shall  be  entitled  to  such  bonus
          compensation as the  Compensation  Committee deems  appropriate.  Such
          bonus  compensation  shall be based,  in part, on the  achievement  of
          performance  criteria  established  by  the  Compensation   Committee,
          including criteria relating to the profitability of the Company.

     (c)  Participation  in Company Stock Ownership  Plan.  During the period of
          Executive's  employment,  Executive will be entitled to participate in
          the Company's Stock Option Plan (or such other successor plan), as the
          Board of Directors or Compensation  Committee, in its sole discretion,
          may  determine.  Executive  shall  receive  a stock  option  grant  in
          accordance with Exhibit A attached hereto.

     (d)  Benefits. Executive will not be eligible to participate in all benefit
          programs of the Company  which are in effect for its senior  executive
          personnel  and, to the extent  available to executive  personnel,  its
          employees generally from time to time.

     (e)  Vacation.  Executive  will be  entitled  each year to  vacation  for a
          period or periods  inconsistent  with the normal  policy of Company in
          effect  from  time to time,  but in any  event  not less  than  twenty
          vacation  days each year and to such  holidays  as may be  customarily
          afforded  to  its  employees  by the  Company,  during  which  periods
          Executive's compensation shall be paid in full.

     (f)  Reimbursement of Expenses.

          (i)  All  reasonable  travel and  entertainment  expenses  incurred by
               Executive in the course of fulfilling this Agreement or otherwise
               promoting the Company and its business shall be reimbursed by the
               Company.  Such reimbursement  shall be made to Executive promptly
               following  submission  to  the  Company  of  receipts  and  other
               documentation  of such expenses  reasonably  satisfactory  to the
               Company.

                                       2
<PAGE>

3.   Termination.

     (a)  Death and Legal  Incapacity.  Executive's  employment  hereunder shall
          terminate upon Executive's death or legal incapacity.

     (b)  Disability.  Executive's employment hereunder may be terminated by the
          Company  in the  event  of  Executive's  Disability.  As  used in this
          Agreement,  the term "Disability"  shall mean the inability or failure
          of the  Executive to perform the  essential  functions of the position
          for  which  she has been  employed  by the  Company,  for more than 90
          consecutive days or for shorter periods aggregating more than 150 days
          in any period of 12  consecutive  months,  all as  determined  in good
          faith by a majority vote of the disinterested members of the Company's
          Board of Directors.  Until such  termination  occurs,  Executive shall
          continue  to  receive  her Base  Salary as then in  effect,  provided,
          however,  that  such  salary  shall be  reduced  to the  extent of any
          disability  benefits  provided to Executive  under a  disability  plan
          sponsored by the Company.

     (c)  For Cause.  Executive's  employment hereunder may be terminated by the
          Company  for  cause  ("Cause")  upon  the  occurrence  of  any  of the
          following  events and in  accordance  with the time  periods set forth
          below:

          (i)  Executive's breach of any material duty or obligation  hereunder,
               which  breach  continues or renews at any time after notice and a
               reasonable  opportunity  to  desist  or  otherwise  cure has been
               furnished.

          (ii) Executive is convicted or pleads guilty or nolo  contendre to any
               felony  (other than  traffic  violation)  or any crime  involving
               fraud, dishonesty or misappropriation;

          (iii) Executive  willfully  engages in misconduct that causes material
               harm to the Company

          (iv) The  Executive  willfully  engages in an act that  constitutes  a
               conflict  of  interest  with the  Company  or a  usurpation  of a
               business  opportunity of the Company,  in either case without the
               prior written approval of the Company's Board of Directors.

          The  determination  as to  whether  any of the  foregoing  Causes  has
          occurred  shall be made in good  faith by the  affirmative  vote of at
          least  75% of the  disinterested  members  of the  Company's  Board of
          Directors. No event shall be deemed a basis for Cause unless Executive
          is  terminated  therefore  within 60 days after such event is known to
          the Chairman of the Company or if Executive is Chairman,  known to the
          Chairman of any committee of the Board.

     (d)  For Good Reason.  Executive may terminate her employment hereunder for
          good reason  ("Good  Reason") if such  termination  occurs  within six
          months 60 days after:

                                       3
<PAGE>

          (i)  The Company  assigns to Executive any duties or  responsibilities
               inconsistent  with Section 1, which  assignment  is not withdrawn
               within 20 business days after  Executive's  notice to the Company
               of her reasonable objection thereto; or

          (ii) The Company breaches any material provision of this Agreement and
               such  breach and the  effects  thereof  are not  remedied  by the
               Company within 20 business days after  Executive's  notice to the
               Company of the existence of such breach.

     (e)  Effect of Termination.

          (i)  If the  Company  terminates  Executive's  employment  for reasons
               other than for Cause, or for Executive's  death, legal incapacity
               or Disability, or if Executive terminates this Agreement for Good
               Reason,  the  obligations of Executive  under this Agreement will
               terminate  except that the  covenants  contained  in Section 4(a)
               shall continue indefinitely,  and the obligations in this section
               shall  continue  pursuant to their  terms.  In such event,  for a
               period  of  six  (6)  months   after  the  date  of   Executive's
               termination,  the Company shall pay Executive, in accordance with
               customary payroll procedures, Executive's base salary Base Salary
               as then in effect and, in addition,  any  Performance  Bonus that
               Executive  would  have  earned  in the year  she was  terminated,
               prorated  as of the  date  of  termination.  For  such  six-month
               period, the Company shall continue to provide medical coverage to
               Executive under substantially the same terms as were in effect on
               the date Executive's  employment terminated under this provision.
               Additionally,  any and all  vested  options,  warrants  or  other
               securities  awarded to Executive  pursuant to the Company's Stock
               Option Plan or any other  similar  plan or other  written  option
               agreement  shall,  as of the  date  of  Executive's  termination,
               immediately  vest and  become  exercisable  and all  such  vested
               options, warrants or other securities shall remain exercisable by
               Executive  for  the  duration  of the  period  during  which  the
               options,   warrants  or  other  securities  would  have  remained
               exercisable  if Executive  had remained  employed by the Company.
               The amounts paid to Executive  under this paragraph  shall not be
               affected in any way by Executive's acceptance of other employment
               during the six-month period described above.

          (ii) Except as otherwise provided herein, if Executive  terminates her
               employment  for any reason other than Good Reason or  Executive's
               employment is terminated for Cause,  the obligations of Executive
               and the Company under this Agreement  will terminate  except that
               the  covenants  of  Executive  contained  in  Section  4(a) shall
               continue indefinitely and the covenants of Executive contained in
               Section 4(d) shall  continue  until the first  anniversary of the
               date of Executive's  termination.  In such event, Executive shall
               be entitled to receive only the  compensation  hereunder  accrued
               and unpaid as of the date of Executive's termination.

          (iii) If Executive's  employment  terminates  due to a Disability,  as
               defined in Section 3(b), the  obligations of Executive under this
               Agreement  will  terminated  except that the covenants in Section

                                       4
<PAGE>

               4(a) shall continue indefinitely.  In such event, for a period of
               one year after the date of Executive's  termination,  the Company
               shall  pay  Executive,   in  accordance  with  customary  payroll
               procedures,  Executive's Base Salary as then in effect, provided,
               however,  that the payment of such salary shall be reduced to the
               extent of any long-term disability benefits provided to Executive
               under a long-term  disability plan sponsored by the Company.  The
               vesting and  exercise of any and all  options,  warrants or other
               securities  awarded to Executive  pursuant to the Company's Stock
               Option  Plan or any other  similar  plan shall be governed by the
               terms of such plan,  or if awarded  pursuant to a written  option
               agreement, then the terms of such agreement.

          (iv) No amount payable to Executive  pursuant to this Agreement  shall
               be  subject  to  mitigation  due  to  Executive's  acceptance  or
               availability of other employment.

4.   Restrictive Covenants; Non-Competition.

     The parties  hereto  recognize  that  Executive's  services are special and
unique  and that the  level  of  compensation  and the  provisions  herefor  for
compensation are partly in consideration of and conditioned upon Executive's not
competing with the Company.

     (a)  Except as otherwise  permitted  hereby,  or by the Company's  Board of
          Directors,  Executive shall treat as confidential  and not communicate
          or divulge to any other  person or entity any  information  related to
          the Company or its  affiliates  or the business,  affairs,  prospects,
          financial  condition  or  ownership  of  the  Company  or  any  of its
          affiliates (the "Information")  acquired by Executive from the Company
          or the  Company's  other  employees  or  agents,  except (i) as may be
          required to comply with legal  proceedings  (provided,  that, prior to
          such disclosure in legal  proceedings  Executive  notifies the Company
          and reasonably cooperates with any efforts by the Company to limit the
          scope of such disclosure or to obtain  confidential  treatment thereof
          by the  court or  tribunal  seeking  such  disclosure)  or (ii)  while
          employed by the Company, as Executive reasonably believes necessary in
          performing her duties.  Executive  shall use the  Information  only in
          connection  with the  performance  of her  duties  hereunder,  and not
          otherwise  for her  benefit  or the  benefit  of any  other  person or
          entity. For the purposes of the Agreement,  Information shall include,
          but  not  be  limited  to,  any  confidential  information  concerning
          clients,  subscribers,  marketing, business and operational methods of
          the Company or its  affiliates  and its and its  affiliates'  clients,
          subscribers, contracts, financial or other data, technical data or any
          other confidential or proprietary information possessed, owned or used
          by   the   Company.   Excluded   from   Executive's   obligations   of
          confidentiality  is any part of such Information  that: (i) was in the
          public  domain  prior  to the  date  of  commencement  of  Executive's
          employment  with the  Company or (ii) enters the public  domain  other
          than as a result of Executive's breach of this covenant.  This Section
          (4) (a) shall  survive  the  expiration  or  termination  of the other
          provisions of this Agreement.

                                       5
<PAGE>

     (b)  Executive  shall  fully  disclose  to  the  Company  all  discoveries,
          concepts,  and ideas,  whether or not patentable,  including,  but not
          limited to, processes,  methods,  formulas, and techniques, as well as
          improvements  thereof  or  know-how  related  thereto   (collectively,
          "Inventions")  concerning or relating to the business conducted by the
          Company and concerning  any present or  prospective  activities of the
          Company which are published,  made or conceived by Executive, in whole
          or in part, during Executive's employment with the Company.

     (c)  Executive  shall  make  applications  in due  form for  United  States
          letters patent and foreign  letters  patent on such  Inventions at the
          request of the Company  and at its  expense,  but  without  additional
          compensation to Executive.  Executive  further agrees that any and all
          such  Inventions  shall be the  absolute  property  of  Company or its
          designees.  Executive  shall assign to the Company all of  Executive's
          right,  title and interest in any and all Inventions,  execute any and
          all  instruments  and do any and all acts  necessary  or  desirable in
          connection  with  any  such  application  for  letters  patent  or  to
          establish  and  perfect in the Company the entire  right,  title,  and
          interest in such  Inventions,  patent  applications,  or patents,  and
          shall execute any instrument necessary or desirable in connection with
          any continuations,  renewals, or reissues thereof or in the conduct of
          any related proceedings or litigation.

     (d)  During Executive's employment with the Company and for a period of one
          (1) year after the earlier of the expiration date of this Agreement or
          the termination  Executive's  employment  hereunder by the Company for
          Cause or by Executive  (other than for Good Reason) or subsequent to a
          Change in Control, as hereinafter defined:

          (i)  Executive  will not,  directly or  indirectly,  engage in, own or
               control an interest in (except as a passive  investor in publicly
               held  companies  and  except  for  investments  held at the  date
               hereof)  or act as an  officer,  director,  or  employee  of,  or
               consultant  or adviser  to,  any  entity  located in any state in
               which the  Company  provides  or has  provided  its  services  or
               products  (the  "Covered  Area"),  that  competes,   directly  or
               indirectly, with any of the products or services being offered or
               actively  under  consideration  for  offer  during  the  term  of
               Executive's employment with the Company;

          (ii) Executive  will not  recruit  or hire any  employee,  independent
               contractor  or vendor of the Company,  or  otherwise  induce such
               employee,  independent contractor or vendor to leave the Company,
               to  become  an  employee  of  or  otherwise  be  associated  with
               Executive or any company or business  with which  Executive is or
               may become associated.

          (iii) Executive  will not  solicit  or  accept  from any  customer  or
               account of the  Company  existing at the time or within 12 months
               preceding the  termination  of  Executive's  employment  with the
               Company,  any  business of the kind  offered or  conducted by the
               Company as of the termination of the Executive's  employment with
               the Company.

     (e)  If any portion of the restrictive  covenants contained in this Section
          4 are held to be  unreasonable,  arbitrary or against  public  policy,
          each  covenant  shall  be  considered  divisible  both as to time  and

                                       6
<PAGE>

          geographic  area,  such that each month  within the  specified  period
          shall be deemed a separate  period of time and each county  within the
          Covered Area shall be deemed a separate  geographical area,  resulting
          in an  intended  requirement  that  the  longest  lesser  time and the
          largest lesser  geographic  area  determined  not to be  unreasonable,
          arbitrary,  or against  public  policy shall remain  effective  and be
          specifically enforceable against the Executive.

     (f)  Each  restrictive  covenant on the part of the  Executive set forth in
          this  Agreement  shall be construed as a covenant  independent  of any
          other covenant or provision of this  Agreement or any other  agreement
          which the  Executive may have,  whether fully  performed or executory,
          and the  existence  of any claim or cause of  action by the  Executive
          against  the  Company  whether  predicated  upon  another  covenant or
          provision of this Agreement or otherwise,  shall not, unless otherwise
          allowed by applicable law,  constitute a defense to the enforcement by
          the Company of any other covenant.

     (g)  The period of time  during  which the  Executive  is  prohibited  from
          engaging  in the  practices  identified  in this  Section  4 shall  be
          extended by any length of time during which the Executive is in breach
          of such covenants.

5.   Change of Control.

     In the event of a Change of Control, the following provisions shall apply:

     (a)  If, immediately upon a Change of Control or at any time within one (1)
          year  thereafter,  Executive is no longer  employed by the Company (or
          any entity to which this Agreement may be assigned in connection  with
          such Change of Control) for any reason other than  Executive's  death,
          legal  incapacity  or  disability,  Executive  shall  be  entitled  to
          receive, within 10 days after the termination date, a lump sum payment
          ("Change  of  Control  Payment")  equal  to one  half  the  amount  of
          Executive's  annual Base Salary then in effect plus any other  amounts
          accrued  and  unpaid  as of the  date  of  termination  (i.e.,  earned
          bonuses, car allowance,  unreimbursed business expenses, and any other
          amount due to Executive under employee benefit or fringe benefit plans
          of the Company).  Notwithstanding the foregoing, if Executive shall so
          request,  any Change of Control  Payment may be paid to  Executive  in
          substantially  equal  monthly  installments,  or  more  frequently  in
          accordance with the Company's usual payroll policy. Additionally,  any
          and all  options,  warrants or other  securities  awarded to Executive
          pursuant to the Company's  Stock Option Plan or any other similar plan
          shall, as of the date of Executive's termination, immediately vest and
          become  exercisable by Executive for the duration of the period during
          which the options,  warrants or other  securities  would have remained
          exercisable if Executive had remained employed by the Company.

     (b)  For purposes of this Section 5, a "Change of Control"  shall be deemed
          to occur upon any of the following events:

          (1)  Any "person" or "group"  within the meaning of Sections 13(d) and
               14(d)(2) of the Exchange Act (i) becomes the "beneficial  owner,"
               as defined in Rule 13d-3 under the  Exchange  Act, of 50% or more
               of the combined  voting power of the Company's  then  outstanding

                                       7
<PAGE>

               securities,  otherwise  than through a  transaction  or series of
               related  transactions  arranged by, or consummated with the prior
               approval of, the Board or (ii) acquires by proxy or otherwise the
               right  to  vote  50% or  more  of  the  then  outstanding  voting
               securities of the Company,  otherwise than through an arrangement
               or arrangements consummated with the prior approval of the Board,
               for the election of directors, for any merger or consolidation of
               the Company or for any other matter or question.

          (2)  During any period of 12  consecutive  months (not  including  any
               period prior to the adoption of this Section),  Present Directors
               and/or  New  Directors  cease  for any  reason  to  constitute  a
               majority of the Board.  For purposes of the  preceding  sentence,
               "Present  Directors"  shall mean individuals who at the beginning
               of such  consecutive  12-month  period were members of the Board,
               and "New Directors" shall mean any director whose election by the
               Board  or  whose   nomination   for  election  by  the  Company's
               stockholders was approved by a vote of at least two-thirds of the
               directors then still in office who were Present  Directors or New
               Directors.

          (3)  Consummation of (i) any consolidation or merger of the Company in
               which the Company is not the continuing or surviving  corporation
               or pursuant  to which  shares of Stock  would be  converted  into
               cash,  securities or other  property,  other than a merger of the
               Company in which the  holders of Stock  immediately  prior to the
               merger have the same  proportion and ownership of common stock of
               the surviving  corporation  immediately  after the merger or (ii)
               any sale,  lease,  exchange or other transfer (in one transaction
               or a series of related  transactions)  of all,  or  substantially
               all,  of  the  assets  of  the  Company;   provided,   that,  the
               divestiture of less than  substantially  all of the assets of the
               Company in one  transaction or a series of related  transactions,
               whether effected by sale, lease,  exchange,  spin-off sale of the
               stock  or  merger  of  a  subsidiary  or  otherwise,   shall  not
               constitute a Change in Control.

     For purposes of this Section 5(b),  the rules of Section 318(a) of the Code
     and the  regulations  issued  thereunder  shall be used to determine  stock
     ownership.

     (c)  Excise Tax  Gross-Up.  If  Executive  becomes  entitled to one or more
          payments (with a "payment"  including the vesting of restricted stock,
          a stock  option,  or other  non-cash  benefit  or  property),  whether
          pursuant to the terms of this Agreement or any other plan or agreement
          with the Company or any affiliated company  (collectively,  "Change of
          Control  Payments"),  which are or become  subject to the tax ("Excise
          Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as
          amended (the  "Code"),  the Company shall pay to Executive at the time
          specified  below  such  amount  (the  "Gross-up  Payment")  as  may be
          necessary to place  Executive in the same after-tax  position as if no
          portion of the  Change of Control  Payments  and any  amounts  paid to
          Executive  pursuant  to this  paragraph  5(c) had been  subject to the
          Excise Tax. The Gross-up  Payment shall include,  without  limitation,
          reimbursement  for any  penalties  and  interest  that may  accrue  in
          respect of such Excise Tax. For purposes of determining  the amount of

                                       8
<PAGE>

          the Gross-up  Payment,  Executive shall be deemed:  (A) to pay federal
          income taxes at the highest  marginal rate of federal income  taxation
          for the year in which the Gross-up  Payment is to be made;  and (B) to
          pay any  applicable  state  and  local  income  taxes  at the  highest
          marginal  rate of taxation for the calendar year in which the Gross-up
          Payment is to be made, net of the maximum  reduction in federal income
          taxes which could be obtained  from  deduction of such state and local
          taxes  if  paid  in  such  year.  If the  Excise  Tax is  subsequently
          determined to be less than the amount taken into account  hereunder at
          the time the Gross-up  Payment is made,  Executive  shall repay to the
          Company at the time that the amount of such reduction in Excise Tax is
          finally determined (but, if previously paid to the taxing authorities,
          not prior to the time the  amount of such  reduction  is  refunded  to
          Executive or otherwise realized as a benefit by Executive) the portion
          of the  Gross-up  Payment that would not have been paid if such Excise
          Tax had been used in initially  calculating the Gross-up Payment, plus
          interest  on the  amount of such  repayment  at the rate  provided  in
          Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
          determined  to exceed the amount taken into  account  hereunder at the
          time  the  Gross-up  Payment  is  made,  the  Company  shall  make  an
          additional  Gross-up  Payment  in  respect  of such  excess  (plus any
          interest  and  penalties  payable  with respect to such excess) at the
          time that the amount of such excess is finally determined.

          The Gross-up  Payment provided for above shall be paid on the 30th day
          (or such earlier date as the Excise Tax becomes due and payable to the
          taxing  authorities)  after it has been  determined that the Change of
          Control  Payments  (or any portion  thereof) are subject to the Excise
          Tax; provided, however, that if the amount of such Gross-up Payment or
          portion  thereof  cannot be finally  determined on or before such day,
          the  Company  shall  pay to  Executive  on such  day an  estimate,  as
          determined  by  counsel  or  auditors  selected  by  the  Company  and
          reasonably  acceptable  to  Executive,  of the minimum  amount of such
          payments.  The Company  shall pay to Executive  the  remainder of such
          payments  (together  with  interest  at the rate  provided  in Section
          1274(b)(2)(B)  of the  Code)  as soon  as the  amount  thereof  can be
          determined.  In the event  that the amount of the  estimated  payments
          exceeds  the amount  subsequently  determined  to have been due,  such
          excess shall constitute a loan by the Company to Executive, payable on
          the fifth day after demand by the Company  (together  with interest at
          the rate provided in Section  1274(b)(2)(B)  of the Code). The Company
          shall  have the right to control  all  proceedings  with the  Internal
          Revenue  Service that may arise in connection  with the  determination
          and assessment of any Excise Tax and, at its sole option,  the Company
          may pursue or forego any and all administrative appeals,  proceedings,
          hearings, and conferences with any taxing authority in respect of such
          Excise Tax  (including any interest or penalties  thereon);  provided,
          however, that the Company's control over any such proceedings shall be
          limited to issues with  respect to which a Gross-up  Payment  would be
          payable  hereunder,  and  Executive  shall be  entitled  to  settle or
          contest any other issue raised by the Internal  Revenue Service or any
          other taxing authority.  Executive shall cooperate with the Company in
          any proceedings  relating to the  determination  and assessment of any
          Excise  Tax and  shall not take any  position  or  action  that  would
          materially increase the amount of any Gross-up Payment hereunder.

                                       9
<PAGE>

6.   No Violation.

     Executive  warrants that the  execution and delivery of this  Agreement and
the performance of her duties  hereunder will not violate the terms of any other
agreement  to  which  she is a party  or by which  she is  bound.  Additionally,
Executive  warrants  that  Executive  has not  brought and will not bring to the
Company or use in the performance of Executive's responsibilities at the Company
any materials or documents of a former employer that are not generally available
to the public,  unless Executive has obtained express written authorization from
the former employer for their possession and use. Executive  represents that she
is not and, since the  commencement  of Executive's  employment with the Company
has   not   been  a   party   to  any   employment,   proprietary   information,
confidentiality,   or  noncompetition  non-competition  agreement  with  any  of
Executive's  former  employers  which remains in effect as the date hereof.  The
warranties  set  forth  in  this  Section  6 shall  survive  the  expiration  or
termination of the other provisions of this Agreement.

7.   Breach by Executive.

     Both  parties  recognize  that  the  services  to be  rendered  under  this
Agreement by Executive are special,  unique and extraordinary in character,  and
that in the event of the breach by Executive of the terms and conditions of this
Agreement to be performed by him or in the event Executive performs services for
any person,  firm or  corporation  engaged in a competing  line of business with
Company,  the Company  shall be  entitled,  if it so elects,  to  institute  and
prosecute proceedings in any court of competent jurisdiction,  whether in law or
in equity, to, by way of illustration and not limitation, obtain damages for any
breach of this  Agreement,  or to enforce the  specific  performance  thereof by
Executive, or to enjoin Executive from competing with the Company or, performing
services for himself or any such other person, firm or corporation.  The Company
may obtain an injunction restraining any such breach by Executive and no bond or
other  security  shall be  required  in  connection  therewith.  The Company and
Executive each consent to the  jurisdiction  of United States  Federal  District
Court for the Northern District of Alabama.

8.   Miscellaneous.

     (a)  This  Agreement  shall be binding upon and inure to the benefit of the
          Company,  its  successors,  and  assigns  and may not be  assigned  by
          Executive.

     (b)  This Agreement contains the entire agreement of the parties hereto and
          supersedes  all  prior  or  concurrent  agreements,  whether  oral  or
          written,  relating to the subject matter hereof. This Agreement may be
          amended only by a writing signed by the party against whom enforcement
          is sought.

                                       10
<PAGE>

     (c)  THIS AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH
          THE LAWS OF THE STATE OF ALABAMA  WITHOUT  REGARD TO ITS  CONFLICTS OF
          LAWS, RULES OR PRINCIPLES.

     (d)  Any notices or other  communications  required or permitted  hereunder
          shall be in writing and shall be deemed  effective  when  delivered in
          person  or, if mailed,  on the date of  deposit in the mails,  postage
          prepaid,  to the other party at the  respective  address of such party
          set forth herein or to such other address as shall have been specified
          in writing by either party to the other in accordance herewith.

     (e)  The provisions of Sections 4(a),  4(d) and 6 and the other  provisions
          of this  Agreement  which by their terms  contemplate  survival of the
          termination  of this  Agreement,  shall  survive  termination  of this
          Agreement and be deemed to be independent covenants.

     (f)  If any term or provision of this  Agreement or its  application to any
          person or circumstance is to any extent invalid or unenforceable,  the
          remainder  of this  Agreement,  or the  application  of  such  term or
          provision to persons or circumstances  other than those as to which it
          is held invalid or unenforceable,  shall not be affected thereby,  and
          each term and  provision  shall be valid and  enforced  to the fullest
          extent permitted by law.

     (g)  No delay or omission to exercise any right,  power or remedy  accruing
          to any party hereto  shall  impair any such right,  power or remedy or
          shall be construed to be a waiver of or an  acquiescence to any breach
          hereof.  No waiver of any breach of this Agreement  shall be deemed to
          be a waiver  of any  other  breach of this  Agreement  theretofore  or
          thereafter  occurring.  Any waiver of any  provision  hereof  shall be
          effective only to the extent  specifically set forth in the applicable
          writing.  All  remedies  afforded  under this  Agreement  to any party
          hereto,  by law or otherwise,  shall be cumulative and not alternative
          and  shall not  preclude  assertion  by any party  hereto of any other
          rights or the  seeking of any other  rights or  remedies  against  any
          other party hereto.

     (h)  It is the intent of the  Company  that  Executive  not be  required to
          incur  any  legal  fees  or  disbursements  associated  with  (i)  the
          interpretation  of any  provision  in,  or  obtaining  of any right or
          benefit under this  Agreement,  or (ii) the  enforcement of her rights
          under this Agreement,  including,  without limitation by litigation or
          other  legal  action,  because  the cost  and  expense  thereof  would
          substantially  detract  from the  benefits to be extended to Executive
          hereunder.  Accordingly,  the Company irrevocably authorizes Executive
          from time to time to retain  counsel of her choice,  at the expense of
          the  Company  as  hereafter   provided,   to  represent  Executive  in
          connection  with  the   interpretation   and/or  enforcement  of  this
          Agreement,  including without  limitation the initiation or defense of
          any  litigation  or other  legal  action,  whether by or  against  the
          Company, or any Director,  officer,  stockholder,  or any other person
          affiliated with the Company in any jurisdiction. The Company shall pay
          or cause to be paid and  shall be solely  responsible  for any and all
          reasonable  attorneys'  and  related  fees and  expenses  incurred  by
          Executive under this Section 8(h).

                                       11
<PAGE>

     (i)  The Background  section of this Agreement is hereby  incorporated into
          the Operative Provisions of this Agreement.

9.   Indemnification.

     The Company agrees to indemnify  Executive to the fullest extent  permitted
by  applicable  law,  as  such  law  may  be  hereafter  amended,   modified  or
supplemented  and to the  fullest  extent  permitted  by each  of the  Company's
Restated  Certificate of Incorporation and the Company's  Restated  By-Laws,  as
from time to time amended, modified or supplemented.  The Company further agrees
that  Executive  is entitled  to the  benefits of any  directors  and  officers'
liability  insurance policy, in accordance with the terms and conditions of that
policy, if such a policy is maintained by the Company.

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

                                         COMPANY
                                         -------

                                         DIGITAL FUSION, INC.

                                         By:  /s/ Gary S. Ryan
                                            ------------------------------------
                                         Its: President

                                         EXECUTIVE
                                         ---------

                                          /s/ Maria A. Sepulveda
                                         ---------------------------------------
                                         Maria A. Sepulveda

                                       12
<PAGE>

                                    EXHIBIT A
                                    ---------

Stock Options*
--------------

Stock Option Grant 1
--------------------

     The Company  hereby  awards to  Executive an option to purchase One Hundred
Twenty Thousand  (120,000)  shares of the Company's  Common Stock. The price per
share shall be  determined on the effective  date of the grant.  Forty  Thousand
(40,000) shares shall vest one hundred percent (100%)  immediately,  pursuant to
the terms and  conditions,  as set forth in the Company's  Stock Option Plan and
Agreement.   The  remaining  Eighty  Thousand  (80,000)  shares  shall  vest  in
accordance with the performance schedule below.

     Performance Vesting I
     ---------------------

     Forty  Thousand  (40,000)  shares  will  vest one  hundred  percent  (100%)
immediately the following if the Company's  trailing four (4) quarters'  revenue
is more than $50  million  with  minimum  net  income of $3.5  million OR if the
Company's  trailing  four (4)  quarters'  earnings  is more than  $5.0  million.
Revenue  shall be based on GAAP;  however,  they shall be adjusted to  eliminate
extraordinary  one-time  events such as expensing  acquisition  costs or revenue
associated with an acquisition.

     Performance Vesting II
     ----------------------

     Forty  Thousand  (40,000)  shares  will  vest one  hundred  percent  (100%)
immediately the following if the Company's  trailing four (4) quarters'  revenue
is more than $65  million  with  minimum  net  income of $4.6  million OR if the
Company's  trailing  four (4)  quarters'  earnings  is more than  $6.5  million.
Revenue  shall be based on GAAP;  however,  they shall be adjusted to  eliminate
extraordinary  one-time  events such as expensing  acquisition  costs or revenue
associated with an acquisition.

Stock Option Grant 2
--------------------

     The Company hereby awards to Executive an option to purchase Sixty Thousand
(60,000)  shares of the  Company's  Common  Stock.  The price per share shall be
determined  on the  effective  date of the grant.  The Sixty  Thousand  (60,000)
shares shall vest in accordance with the performance schedule below.

     Performance Vesting I
     ---------------------

     Thirty  Thousand  (30,000)  shares  will vest one  hundred  percent  (100%)
immediately upon the Northeast Region earning $10 million in revenue.

     Performance Vesting II
     ----------------------

     Thirty  Thousand  (30,000)  shares  will vest one  hundred  percent  (100%)
immediately upon the Northeast Region earning $20 million in revenue.

* During the period of the Executive's employment, Executive will be entitled to
further participate in the Company's Stock Ownership Plan, as the Board of
Directors, in its sole discretion, may determine.

                                       13

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