Document:

Exhibit
      10.1

     

    INDEMNIFICATION
      AGREEMENT

    

    THIS
      INDEMNIFICATION AGREEMENT,
      made
      and entered into as of this 8th day of July, 2008 (this “Agreement”), by and
      between NU
      HORIZONS ELECTRONICS CORP.,
      a
      Delaware corporation (the “Corporation”), and ______________
      (“Indemnitee”):

     

    WHEREAS,
      highly
      competent persons are becoming more reluctant to serve publicly-held
      corporations as directors or as officers or in other capacities unless they
      are
      provided with adequate protection through insurance or adequate indemnification
      against inordinate risks of claims and actions against them arising out of
      their
      service to, and activities on behalf of, such corporations; and

     

    WHEREAS,
      the
      statutes and judicial duties regarding the duties of officers and directors
      are
      often difficult to apply, ambiguous or conflicting and therefore fail to provide
      such directors and officers with adequate and reliable knowledge of legal risks
      to which they are exposed or information regarding the proper course of action
      to take; and

     

    WHEREAS,
      the
      current impracticability of obtaining adequate insurance and the uncertainties
      relating to indemnification have increased the difficulty of attracting and
      retaining such persons; and

     

    WHEREAS,
      the
      Board of Directors of the Corporation (the “Board of Directors”) has determined
      that the difficulty in attracting and retaining such persons is detrimental
      to
      the best interests of the Corporation’s stockholders and that the Corporation
      should act to assure such persons that there will be increased certainty of
      such
      protection in the future; and

     

    WHEREAS,
      the
      Corporation believes it is unfair for the directors and officers to assume
      the
      risk of huge judgments and other expenses which may occur in cases in which
      the
      director or officer acted in good faith; and

     

    WHEREAS,
      it is
      reasonable, prudent and necessary for the Corporation contractually to obligate
      itself to indemnify such persons to the fullest extent permitted by applicable
      law so that they will serve or continue to serve the Corporation free from
      undue
      concern that they will not be so indemnified; and

     

    WHEREAS,
      Indemnitee is willing to serve, continue to serve and/or to take on additional
      service for or on behalf of the Corporation on the condition that he or she
      be
      so indemnified;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the covenants contained herein, the
      Corporation and Indemnitee do hereby covenant and agree as follows:

     

    1. DEFINITIONS
      FOR PURPOSES OF THIS AGREEMENT:

     

    (a) “Change
      in Control” means a change in control of the Corporation of a nature that would
      be required to be reported in response to Item 5(f) of Schedule 14A of
      Regulation 14A (or in response to any similar item or similar schedule or form)
      promulgated under the Securities Exchange Act of 1934 (the “Act”), whether or
      not the Corporation is then subject to such reporting requirement; provided,
      however, that, without limitation, such a Change in Control shall be deemed
      to
      have occurred if (i) any “person” (as such term is used in Sections 13(d) and
      14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
      under the Act), directly or indirectly, of securities of the Corporation
      representing 20% or more of the combined voting power of the Corporation’s then
      outstanding securities without the prior approval of at least two-thirds of
      the
      members of the Board of Directors in office immediately prior to such person
      attaining such percentage interest; (ii) the Corporation is a party to a merger,
      consolidation, sale of assets or other reorganization, or a proxy contest,
      as a
      consequence of which members of the Board of Directors in office immediately
      prior to such transaction or event constitute less than two-thirds of the Board
      of Directors thereafter; (iii) during any period of twenty-four (24) consecutive
      months, individuals who at the beginning of such period constituted the Board
      of
      Directors (including for this purpose any new director whose election or
      nomination for election by the Corporation’s stockholders was approved by a vote
      of at least two-thirds of the directors then still in office who were directors
      at the beginning of such period) cease for any reason to constitute at least
      two-thirds of the Board of Directors; or (iv) the stockholders of the
      Corporation approve a plan of complete liquidation of the Corporation or an
      agreement for the sale or disposition by the Corporation (in one transaction
      or
      a series of transactions) of all or substantially all of the Corporation’s
      assets.

     

    (b) “Potential
      Change in Control” shall be deemed to have occurred if (i) the Corporation
      enters into an agreement, the consummation of which would result in the
      occurrence of a Change in Control; (ii) a person (including the Corporation)
      publicly announces a legitimate intention to take or to consider taking actions
      which if consummated would constitute a Change in Control; (iii) any person,
      other than a trustee or other fiduciary holding securities under an employee
      benefit plan of the Corporation or a corporation owned, directly or indirectly,
      by the shareholders of the Corporation in substantially the same proportions
      as
      their ownership of stock of the Corporation, who is or becomes the beneficial
      owner, directly or indirectly, of securities of the Corporation representing
      9.5% or more of the combined voting power of the Corporation’s then outstanding
      Voting Securities, increases his beneficial ownership of such securities by
      five
      percentage points or more over the percentage so owned by such person; or (iv)
      the Board of Directors adopts a resolution to the effect that, for purposes
      of
      this Agreement, a Potential Change in Control has occurred.

     

    (c) “Code”
      means the Delaware General Corporation Law, as amended.

     

    
      
        
        

      

      
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    (d) “Corporate
      Status” describes the status of a person who (i) is or was or has agreed to
      become a director, officer, employee or other fiduciary of the Corporation
      or a
      Subsidiary, or (ii) is or was serving at the request or for the convenience
      of,
      or representing the interests of the Corporation or a Subsidiary as a director,
      officer, employee or other fiduciary of a foreign or domestic corporation,
      partnership, joint venture, trust or other enterprise.

     

    (e) “Disinterested
      Director” means a director of the Corporation who is not and was not a party to
      the Proceeding in respect of which indemnification is sought by
      Indemnitee.

     

    (f) “Proceeding”
      includes any threatened, pending or completed inquiry, action, suit,
      arbitration, alternate dispute resolution mechanism, investigation,
      administrative hearing or any other proceeding, whether civil, criminal,
      administrative or investigative, including
      those in which the Indemnitee is merely a witness by reason of the Indemnitee’s
      Corporate Status, except one
      initiated by the Indemnitee pursuant to Section 12(a) of this Agreement to
      enforce Indemnitee’s rights under this Agreement.

     

    (g) “Expenses”
      includes all direct and indirect costs of any type or nature whatsoever
      (including, without limitation, all attorneys’, witness and other professional
      fees and related disbursements, other out-of-pocket costs and reasonable
      compensation for time spent by the Indemnitee for which he is not otherwise
      compensated by the Corporation or any third party (i) for any period during
      which Indemnitee is not an agent, in the employment of, or providing services
      for compensation to, the Corporation or any Subsidiary; and (ii) the rate of
      compensation and estimated time involved is approved in advance by the
      Disinterested Directors, actually and reasonably incurred by the Indemnitee
      in
      connection with either the investigation, defense or appeal of a Proceeding
      (including amounts paid in settlement by or on behalf of Indemnitee), or the
      prosecution of an action or proceeding, including appeals, to establish or
      enforce a right to indemnification under this Agreement. Expenses as defined
      herein, shall not include any judgments, fines or penalties actually levied
      against the Indemnitee.

     

    (h) “Independent
      Counsel” means (i) any law firm or member of a law firm which the Board of
      Directors may designate from time to time provided that the law firm or member
      of the law firm so designated is experienced in matters of corporation law
      and
      neither presently is, nor in the past five years has been, retained to
      represent: (A) the Corporation or Indemnitee in any matter material to either
      such party, or (B) any other party to the Proceeding giving rise to a claim
      for
      indemnification hereunder. Notwithstanding the foregoing, the term “Independent
      Counsel” shall not include any person who, under the applicable standards of
      professional conduct then prevailing, would have a conflict of interest in
      representing either the Corporation or Indemnitee in an action to determine
      Indemnitee’s rights under this Agreement arising on or after the date of this
      Agreement, regardless of when the Indemnitee’s act or failure to act
      occurred.

     

    
      
        
        

      

      
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    (i) “Subsidiary”
      means any corporation, partnership, limited liability company, joint venture,
      trust or other enterprise of which the Corporation owns (either directly or
      through or together with another Subsidiary of the Corporation) either
      (i) a general partner, managing member or other similar interest or
      (ii) (A) 50% or more of the voting power of the voting capital equity
      interests of such corporation, partnership, limited liability company, joint
      venture or other enterprise, or (B) 50% or more of the outstanding voting
      capital stock or other voting equity interests of such corporation, partnership,
      limited liability company, joint venture or other enterprise.

     

    2. SERVICES
      BY INDEMNITEE.

     

    Indemnitee
      agrees to serve or continue to serve as an executive officer of the Corporation
      or any Subsidiary so long as he is duly appointed or elected and qualified
      in
      accordance with the applicable provisions of the By-Laws of the Corporation
      or
      the By-Laws of any Subsidiary or until such time as he tenders his resignation
      in writing. This Agreement shall not impose any obligation on the Indemnitee
      or
      the Corporation to continue the Indemnitee’s position with the Corporation
      beyond any period otherwise applicable, nor to create any right to continued
      employment of the Indemnitee in any capacity.

     

    3. GENERAL.

     

    The
      Corporation shall indemnify, and shall advance Expenses to Indemnitee as
      provided in this Agreement and to the fullest extent permitted by
      law.

     

    4. PROCEEDINGS
      OTHER THAN PROCEEDINGS BY OR IN THE RIGHT
      OF THE CORPORATION.

    

    Indemnitee
      shall be entitled to the rights of indemnification provided in this Section
      4
      if, by reason of Indemnitee’s Corporate Status, he or she is, or is threatened
      to be made, a party to or otherwise involved in any threatened,
      pending or completed
      Proceeding, other than a Proceeding by or in the right of the Corporation.
      Pursuant to this Section 4, Indemnitee shall be indemnified against Expenses
      to
      the fullest extent permitted by the Code, as the same may be amended from time
      to time (but, only to the extent that such amendment permits Indemnitee to
      broader indemnification rights than the Code permitted prior to adoption of
      such
      amendment).

     

    5. PROCEEDINGS
      BY OR IN THE RIGHT OF THE CORPORATION.

     

    Indemnitee
      shall be entitled to the rights of indemnification provided in this Section
      5,
      if, by reason of his Corporate Status, he is, or is threatened to be made,
      a
      party to or otherwise involved in any threatened,
      pending or completed Proceeding brought by or in the right of the Corporation
      to
      procure a
      judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified
      against Expenses to
      the
      fullest extent permitted by the Code, as the same may be amended from time
      to
      time (but, only to the extent that such amendment permits Indemnitee to broader
      indemnification rights than the Code permitted prior to adoption of such
      amendment). 

     

    
      
        
        

      

      
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              6.

            	
              INDEMNIFICATION
                FOR EXPENSES OF SUCCESSFUL PARTY AND PARTIAL
                INDEMNIFICATION.

            

    

    

    Notwithstanding
      any other provision of this Agreement, to the extent that Indemnitee is, by
      reason of his or her Corporate Status, a party to and is successful, on the
      merits or otherwise, in any Proceeding, he or she shall be indemnified against
      all Expenses actually incurred by Indemnitee or on Indemnitee’s behalf in
      connection therewith. If Indemnitee is entitled under any provision of this
      Agreement to indemnification by the Corporation for some or a portion of any
      Expenses actually and reasonably incurred by Indemnitee in the investigation,
      defense, settlement or appeal of any Proceeding, but is precluded by applicable
      law or the specific terms of this Agreement from indemnification for the total
      amount thereof, the Corporation shall nevertheless indemnify Indemnitee for
      the
      portion thereof to which Indemnitee is entitled. For purposes of this Section,
      but without limitation, the termination of any claim, issue or matter in such
      a
      Proceeding by dismissal or withdrawal, with or without prejudice, shall be
      deemed to be a successful result as to such claim, issue or matter.

     

    7. ADVANCE
      OF EXPENSES.

    

    The
      Corporation shall advance all reasonable Expenses incurred by or on behalf
      of
      Indemnitee in connection with any Proceeding within twenty days after the
      receipt by the Corporation of a statement or statements from Indemnitee
      requesting such advance or advances from time to time, whether prior to or
      after
      final disposition of such Proceeding. Such statement or statements shall
      evidence or reflect the Expenses incurred by Indemnitee and shall include or
      be
      preceded or accompanied by an undertaking by or on behalf of Indemnitee to
      repay
      any Expenses advanced
      if and to the extent it is determined ultimately in a court of competent
      jurisdiction in a final judgment, not subject to appeal, that Indemnitee is
      not
      entitled to be indemnified against such Expenses.
      Advances
      shall be unsecured, interest free and without regard to Indemnitee’s ability to
      repay the Expenses. Advances shall include any and all Expenses actually and
      reasonably incurred by Indemnitee pursuing an action to enforce Indemnitee’s
      right to indemnification under this Agreement or otherwise and this right of
      advancement, including Expenses incurred preparing and forwarding statements
      to
      the Corporation to support the advances claimed. Indemnitee acknowledges that
      the execution and delivery of this Agreement shall constitute an undertaking
      providing that Indemnitee shall, to the fullest extent required by law, repay
      the advance if and to the extent that it is ultimately determined by a court
      of
      competent jurisdiction in a final judgment, not subject to appeal, that
      Indemnitee is not entitled to be indemnified by the Corporation in accordance
      with the terms of this Agreement. The right to advances under this Section
      shall
      continue until final disposition of any Proceeding, including any appeal
      therein. This Section 7 shall not apply to any claim made by Indemnitee for
      which indemnity is excluded pursuant to Section 15.

     

    8. PROCEDURE
      FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.

    

    (a) To
      obtain
      indemnification under this Agreement, Indemnitee shall submit to the Corporation
      a written request, including therein or therewith such documentation and
      information as is reasonably available to Indemnitee and is reasonably necessary
      to determine whether and to what extent Indemnitee is entitled to
      indemnification. Promptly upon receipt of such a request for indemnification,
      the Secretary of the Corporation shall advise the Board of Directors in writing
      that Indemnitee has requested indemnification.

     

    
      
        
        

      

      
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    (b) Upon
      written request by Indemnitee for indemnification pursuant to Section 8(a)
      hereof, a determination, if required by applicable law, with respect to
      Indemnitee’s entitlement thereto shall be made in the specific case as follows:
      (i) if a Change in Control shall have occurred, by Independent Counsel in a
      written opinion to the Board of Directors, a copy of which shall be delivered
      to
      Indemnitee (unless Indemnitee shall request that such determination be made
      by
      the Board of Directors, in which case the determination shall be made in the
      manner provided below in clauses (ii) or (iii)); (ii) if a Change in Control
      shall not have occurred, (A) by the Board of Directors by a majority vote of
      a
      quorum consisting of Disinterested Directors, or (B) if a quorum of the Board
      of
      Directors consisting of Disinterested Directors is not obtainable or, even
      if
      obtainable, if such quorum of Disinterested Directors so directs, by Independent
      Counsel in a written opinion to the Board of Directors, a copy of which shall
      be
      delivered to Indemnitee; (iii) as provided in Section 9(b) of this Agreement;
      and, if it is determined that Indemnitee is entitled to indemnification, payment
      to Indemnitee shall be made within ten (10) days after such determination.
      Indemnitee shall cooperate with the person, persons or entity making such
      determination with respect to Indemnitee’s entitlement to indemnification,
      including providing to such person, persons or entity upon reasonable advance
      request any documentation or information which is not privileged or otherwise
      protected from disclosure and which is reasonably available to Indemnitee and
      reasonably necessary to such determination. Any costs or Expenses (including
      attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating
      shall be borne by the Corporation (regardless of the determination as to
      Indemnitee’s entitlement to indemnification) and the Corporation hereby
      indemnifies and agrees to hold Indemnitee harmless therefrom.

     

    (c) In
      the
      event the determination of entitlement to indemnification is to be made by
      Independent Counsel pursuant to Section 8(b) of this Agreement, and no counsel
      shall have been designated previously by the Board of Directors or the
      Independent Counsel so designated is unwilling or unable to serve, then, (i)
      if
      no Change in Control shall have occurred, the Independent Counsel shall be
      selected by the Board of Directors and the Corporation shall give written notice
      to Indemnitee advising him of the identity of the Independent Counsel so
      selected; (ii) if a Change in Control shall have occurred, the Independent
      Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
      such selection be made by the Board of Directors, in which event the preceding
      sentence shall apply), and Indemnitee shall give written notice to the
      Corporation advising it of the identity of the Independent Counsel so selected.
      In either event, Indemnitee or the Corporation, as the case may be, may, within
      7 days after such written notice of selection shall have been given, deliver
      to
      the Corporation or to Indemnitee, as the case may be, a written objection to
      such selection. Such objection may be asserted only on the ground that the
      Independent Counsel so selected does not meet the requirement of “Independent
      Counsel” as defined in this Agreement, and the objection shall set forth with
      particularity the factual basis of such assertion. If such written objection
      is
      made, the Independent Counsel so selected may not serve as Independent Counsel
      unless and until a court has determined that such objection is without merit.
      If, within 20 days after submission by Indemnitee of a written request for
      indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall
      have been selected or if selected, shall have been objected to, in accordance
      with this Section 8(c), either the Corporation or Indemnitee may petition the
      Court of Chancery of the State of Delaware or other court of competent
      jurisdiction for resolution of any objection which shall have been made by
      the
      Corporation or Indemnitee to the other’s selection of Independent Counsel and/or
      for the appointment as Independent Counsel of a person selected by the Court
      or
      by such other person as the Court shall designate, and the person with respect
      to whom an objection is favorably resolved or the person so appointed shall
      act
      as Independent Counsel under Section 8(b) hereof. The Corporation shall pay
      any
      and all reasonable fees and expenses of Independent Counsel incurred by such
      Independent Counsel in connection with the performance of his or her
      responsibilities pursuant to Section 8(b) hereof, and the Corporation shall
      pay
      all reasonable fees and Expenses incident to the implementation of the
      procedures of this Section 8(c), regardless of the manner in which such
      Independent Counsel was selected or appointed. Upon the due commencement of
      any
      judicial proceeding or arbitration pursuant
      to
      Section 12 of this Agreement, Independent Counsel shall be discharged and
      relieved of any further responsibility in such capacity (subject to the
      applicable standards of professional conduct then prevailing).

     

    
      
        
        

      

      
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    9. PRESUMPTIONS
      AND EFFECT OF CERTAIN PROCEEDINGS.

    

    (a) If
      a
      Change in Control shall have occurred, in making a determination with respect
      to
      entitlement to indemnification hereunder, the person, persons or entity making
      such determination shall presume that the Indemnitee is entitled to
      indemnification under this Agreement if the Indemnitee has submitted a request
      for indemnification in accordance with Section 8(a) of this Agreement, and
      the
      Corporation shall have the burden of proof to overcome that presumption in
      connection with the making of any determination contrary to that presumption
      by
      any person, persons or entity.

     

    (b) If
      within
      30 days after receipt by the Corporation of the request for indemnification,
      the
      Board shall not have made a determination under Section 8(b)(i) or 8(b)(ii)(A)
      with regard thereto, the requisite determination of entitlement to
      indemnification shall be deemed to have been made in favor of the Indemnitee
      who
      then shall be entitled to such indemnification. The foregoing provisions of
      this
      Section 9(b) shall not apply if the determination of entitlement to
      indemnification is to be made by Independent Counsel pursuant to Section 8(b)(i)
      or 8(b)(ii)(B) of this Agreement.

     

    (c) The
      termination of any Proceeding or of any claim, issue or matter therein by
      judgment, order, settlement or conviction, or upon a plea of nolo contendere
      or
      its equivalent, shall not (except as otherwise expressly provided in this
      Agreement) of itself adversely affect the right of the Indemnitee to
      indemnification. 

     

    10. ASSUMPTION
      OF DEFENSE.

    

    In
      the
      event the Corporation shall be obligated to pay the Expenses of any Proceeding
      against the Indemnitee, the Corporation, if appropriate, shall be entitled
      to
      assume the defense of such Proceeding, with counsel reasonably acceptable to
      the
      Indemnitee, upon the delivery to the Indemnitee of written notice of its
      election to do so. After delivery of such notice, approval of such counsel
      by
      the Indemnitee and the retention of such counsel by the Corporation, the
      Corporation will not be liable to the Indemnitee under this Agreement for any
      fees of counsel subsequently incurred by the Indemnitee with respect to the
      same
      Proceeding, provided that (i) the Indemnitee shall have the right to employ
      his
      or her counsel in such Proceeding at the Indemnitee’s expense; and (ii) if (a)
      the employment of counsel by the Indemnitee has been previously authorized
      in
      writing by the Corporation, (b) the Corporation shall have reasonably concluded
      that there may be a conflict of interest between the Corporation and the
      Indemnitee in the conduct of any such defense, or (c) the Corporation shall
      not,
      in fact, have employed counsel to assume the defense of such Proceeding, the
      fees and Expenses of the Indemnitee’s counsel shall be subject to the
      indemnification and advancement of Expenses provisions of this
      Agreement.

     

    
      
        
        

      

      
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    11. ESTABLISHMENT
      OF A TRUST.

    

    (a) In
      the
      event of a Potential Change in Control, the Corporation, upon written request
      by
      the Indemnitee, shall create a trust for the benefit of the Indemnitee and
      from
      time to time upon written request of the Indemnitee shall fund such trust in
      an
      amount sufficient to satisfy any and all Expenses which at the time of each
      such
      request it is reasonably anticipated will be incurred in connection with a
      Proceeding for which the Indemnitee is entitled to rights of indemnification
      under Section 4 or 5 hereof, and any and all judgments, fines, penalties and
      settlement amounts of any and all proceedings for which the Indemnitee is
      entitled to rights of indemnification under Section 4 or 5 from time to time
      actually paid or claimed, reasonably anticipated or proposed to be paid. The
      amount or amounts to be deposited in the trust pursuant to the foregoing funding
      obligation shall be determined by the party who would be required to make the
      determination of the Indemnitee’s right to indemnification under Section 8(b)
      hereof (the “Reviewing Party”). The terms of the trust shall provide that upon a
      Change in Control (i) the trust shall not be revoked or the principal thereof
      invaded, without the written consent of the Indemnitee, (ii) the trustee shall
      advance, within two business days of a request by the Indemnitee, any and all
      Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the
      trust under the circumstances under which the Indemnitee would be required
      to
      reimburse the Corporation under Section 7 hereof), (iii) the trust shall
      continue to be funded by the Corporation in accordance with the funding
      obligation set forth above, (iv) the trustee shall promptly pay to the
      Indemnitee all amounts for which the Indemnitee shall be entitled to
      indemnification pursuant to this Agreement or otherwise, and (v) all unexpended
      funds in such trust shall revert to the Corporation upon a final determination
      by the Reviewing Party or a court of competent jurisdiction, as the case may
      be,
      that Indemnitee has been fully indemnified under the terms of this Agreement.
      The trustee shall be an institutional trustee with a highly regarded reputation
      chosen by the Indemnitee. Nothing in this Section 11 shall relieve the
      Corporation of any of its obligations under this Agreement.

    (b) Nothing
      contained in this Section 11 shall prevent the Board of Directors of the
      Corporation in its discretion at any time and from time to time, upon request
      of
      the Indemnitee, from providing security to the Indemnitee for the Corporation’s
      obligations hereunder through an irrevocable line of credit, funded trust as
      described in Section (a) above, or other collateral. Any such security, once
      provided to the Indemnitee, may not be revoked or released without the prior
      consent of the Indemnitee.

     

    12. REMEDIES
      OF INDEMNITEE.

    

    (a) In
      the
      event that any one or more of the following events shall have occurred: (i)
      a
      determination is made pursuant to Section 8 of this Agreement that Indemnitee
      is
      not entitled to indemnification under this Agreement; (ii) Expenses are not
      advanced timely in accordance with Section 7 of this Agreement; (iii) the
      determination of entitlement to indemnification is to be made by Independent
      Counsel pursuant to Section 8(b) of this Agreement and such determination shall
      not have been made and delivered in a written opinion within 90 days after
      receipt by the Corporation of the request for indemnification; (iv) payment
      of
      indemnification is not made pursuant to Section 6 of this Agreement within
      ten
      days after receipt by the Corporation of a written request therefor; (v) payment
      of indemnification is not made within ten days after a determination has been
      made that Indemnitee is entitled to indemnification or such determination is
      deemed to have been made pursuant to Section 9(b) of this Agreement; and/or
      (vi)
      the Corporation fails to comply with its obligations under Section 11(a) with
      regard to the establishment or funding of a trust for Expenses, the Indemnitee
      shall be entitled to an adjudication of his entitlement to such indemnification,
      advancement of Expenses or the establishment and funding of the trust in an
      appropriate court of the State of Delaware, or in any other court of competent
      jurisdiction. Alternatively, Indemnitee, at his or her option, may seek an
      award
      in arbitration to be conducted by a single arbitrator pursuant to the rules
      of
      the American Arbitration Association. Indemnitee shall commence such proceeding
      seeking an adjudication or an award in arbitration within 180 days following
      the
      date on which Indemnitee first has the right to commence such proceeding
      pursuant to this Section 12. The Corporation shall not oppose Indemnitee’s right
      to seek any such adjudication or award in arbitration.

     

    
      
        
        

      

      
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    (b) Whenever
      a determination is made pursuant to Section 8 of this Agreement that Indemnitee
      is not entitled to indemnification, the judicial proceeding or arbitration
      commenced pursuant to this Section 12 shall be conducted in all respects as
      a de
      novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced
      by reason of that adverse determination. If a Change in Control shall have
      occurred, the Corporation shall have the burden of proving that Indemnitee
      is
      not entitled to indemnification or advancement of Expenses, as the case may
      be,
      in any judicial proceeding or arbitration commenced pursuant to this Section
      12.

     

    (c) If
      a
      determination shall have been made or deemed to have been made pursuant to
      Section 8 of this Agreement that Indemnitee is entitled to indemnification,
      the
      Corporation shall be bound by such determination in any judicial proceeding
      or
      arbitration commenced pursuant to this Section 12 absent (i) a misstatement
      by
      Indemnitee of a material fact, or an omission of a material fact necessary
      to
      make Indemnitee’s statement not materially misleading, in connection with the
      request for indemnification, or (ii) a prohibition of such indemnification
      under
      applicable law.

     

    (d) The
      Corporation shall be precluded from asserting in any judicial proceeding or
      arbitration commenced pursuant to this Section 12 that the procedures and
      presumptions of this Agreement are not valid, binding and enforceable and shall
      stipulate in any such court or before any such arbitrator that the Corporation
      is bound by all the provisions of this Agreement.

     

    (e) In
      the
      event that Indemnitee, pursuant to this Section 12 seeks a judicial adjudication
      or an award in arbitration to enforce his or her rights under, or to recover
      damages for breach of, this Agreement, Indemnitee shall be entitled to recover
      from the Corporation, and shall be indemnified by the Corporation against,
      any
      and all expenses (of the types described in the definition of Expenses in this
      Agreement) actually incurred by Indemnitee in connection with obtaining such
      judicial adjudication or arbitration, but only if he or she prevails therein.
      If
      it shall be determined in said judicial adjudication or arbitration that
      Indemnitee is entitled to receive part but not all of the indemnification or
      advancement of Expenses sought, the Expenses incurred by Indemnitee in
      connection with such judicial adjudication or arbitration shall be appropriately
      prorated. 

     

    13. NON-EXCLUSIVITY;
      DURATION OF AGREEMENT; INSURANCE: SUBROGATION.

    

    (a) The
      rights of indemnification and to receive advancement of Expenses as provided
      by
      this Agreement shall not be deemed exclusive of any other rights to which
      Indemnitee may at any time be entitled under applicable law, the Corporation’s
      Certificate of Incorporation or By-Laws, any other agreement, a vote of
      stockholders or a resolution of directors, or otherwise. This Agreement shall
      continue until and terminate upon the later of: (a) 10 years after the date that
      Indemnitee shall have ceased to serve as an officer or director of the
      Corporation, or (b) the final termination of all pending Proceedings in respect
      of which Indemnitee is granted rights of indemnification or advancement of
      Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
      Section 12 of this Agreement relating thereto. 

     

    (b) (i) To
      the
      extent that the Corporation maintains an insurance policy or policies providing
      liability insurance for directors and officers of the Corporation, Indemnitee
      shall be covered by such policy or policies in accordance with the terms thereof
      to the maximum extent of the coverage available for any such director, officer,
      employee or agent under such policy or policies. The Corporation shall take
      all
      necessary or appropriate action to cause such insurers to pay on behalf of
      the
      Indemnitee all amounts payable as a result of the commencement of a proceeding
      in accordance with the terms of such policy.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (ii) Notwithstanding
      the fact that the Indemnitee shall have ceased to serve as an officer or
      director of the Corporation, the Corporation will continue to provide officers
      and directors liability insurance for Indemnitee from the date of termination
      of
      such service for a period of three years, which insurance will be on terms
      no
      less favorable than that provided to the current officers and directors,
      provided that the Corporation provides officers and directors liability
      insurance to its current officers and directors, and provided further that
      the
      annual premiums for the liability insurance to be provided to the Indemnitee
      do
      not exceed by more than 50% the premium charged for the coverage available
      for
      any of the Corporation’s current officers and directors. The foregoing shall not
      limit the Company’s ability to purchase a tail insurance policy for the benefit
      of the Indemnitee for a period exceeding three years in the event of a Change
      in
      Control or other extraordinary transaction.

     

    (c) In
      the
      event of any payment under this Agreement, the Corporation shall be subrogated
      to the extent of such payment to all of the rights of recovery of Indemnitee,
      who shall execute all papers required and take all action necessary to secure
      such rights, including execution of such documents as are necessary to enable
      the Corporation to bring suit to enforce such rights.

     

    (d) The
      Corporation shall not be liable under this Agreement to make any payment of
      amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee
      otherwise actually has received such payment under any insurance policy,
      contract, agreement or otherwise.

     

    14. SEVERABILITY.

    

    If
      any
      provision or provisions of this Agreement shall be held to be invalid, illegal
      or unenforceable for any reason whatsoever: (a) the validity, legality and
      enforceability of the remaining provisions of this Agreement (including without
      limitation, each portion of any Section of this Agreement containing any such
      provision held to be invalid, illegal or unenforceable, that is not itself
      invalid, illegal or unenforceable) shall not in any way be affected or impaired
      thereby; and (b) to the fullest extent possible the provisions of this Agreement
      (including, without limitation, each portion of any Section of this Agreement
      containing any such provision held to be invalid, illegal or unenforceable,
      that
      is not itself invalid, illegal or unenforceable) shall be construed so as to
      give effect to the intent manifested by the provision held invalid, illegal
      or
      unenforceable.

     

    15. EXCEPTION
      TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT
      OF EXPENSES.

    

    (a) Any
      provision herein to the contrary notwithstanding, the Corporation shall not
      be
      obligated pursuant to the terms of this Agreement to indemnify Indemnitee on
      account of any Proceeding with respect to (i) remuneration paid to
      Indemnitee if it is determined by final judgment or other final adjudication
      that such remuneration was in violation of law (and, in this respect, both
      the
      Corporation and Indemnitee have been advised that the Securities and Exchange
      Commission believes that indemnification for liabilities arising under the
      federal securities laws is against public policy and is, therefore,
      unenforceable and that claims for indemnification should be submitted to
      appropriate courts for adjudication, as indicated in Section 15(d) below);
      (ii) a final judgment rendered against Indemnitee for an accounting,
      disgorgement or repayment of profits made from the purchase or sale by
      Indemnitee of securities of the Corporation against Indemnitee or in connection
      with a settlement by or on behalf of Indemnitee to the extent it is acknowledged
      by Indemnitee and the Corporation that such amount paid in settlement resulted
      from Indemnitee's conduct from which Indemnitee received monetary personal
      profit, pursuant to the provisions of Section 16(b) of the Securities
      Exchange Act of 1934, as amended, or other provisions of any federal, state
      or
      local statute or rules and regulations thereunder; (iii) a final judgment
      or other final adjudication not subject to appeal that Indemnitee’s conduct was
      in bad faith, knowingly fraudulent or deliberately dishonest or constituted
      willful misconduct (but only to the extent of such specific determination);
      or
      (iv) on account of conduct that is established by a final judgment not subject
      to appeal as constituting a breach of Indemnitee’s duty of loyalty to the
      Corporation or resulting in any personal profit or advantage to which Indemnitee
      is not legally entitled. For purposes of the foregoing sentence, a final
      judgment or other adjudication not subject to appeal may be reached in either
      the underlying Proceeding in connection with which indemnification is sought
      or
      a separate proceeding or action to establish rights and liabilities under this
      Agreement. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (b) Any
      provision herein to the contrary notwithstanding, the Corporation shall not
      be
      obligated to indemnify or advance Expenses to Indemnitee with respect to
      proceedings or claims initiated or brought by Indemnitee against the Corporation
      or its directors, officers, employees or other agents and not by way of defense,
      except (i) with respect to Proceedings brought to establish or enforce a right
      to indemnification under this Agreement or under any other agreement, provision
      in the By-Laws or Certificate of Incorporation or applicable law, or (ii) with
      respect to any other Proceeding initiated by Indemnitee that is either approved
      by the Board of Directors or in which Indemnitee’s participation is required by
      applicable law. However, indemnification or advancement of Expenses may be
      provided by the Corporation in specific cases if the Board of Directors
      determines it to be appropriate.

     

    (c) Any
      provision herein to the contrary notwithstanding, the Corporation shall not
      be
      obligated pursuant to the terms of this Agreement to indemnify Indemnitee under
      this Agreement for any amounts paid in settlement of a Proceeding effected
      without the Corporation’s written consent. Neither the Corporation nor
      Indemnitee shall unreasonably withhold consent to any proposed settlement;
      provided, however, that the Corporation may in any event decline to consent
      to
      (or to otherwise admit or agree to any liability for indemnification hereunder
      in respect of) any proposed settlement if the Corporation is also a party in
      such Proceeding and determines in good faith that such settlement is not in
      the
      best interests of the Corporation and its stockholders.

     

    (d) Any
      provision herein to the contrary notwithstanding, the Corporation shall not
      be
      obligated pursuant to the terms of this Agreement to indemnify Indemnitee or
      otherwise act in violation of any undertaking appearing in and required by
      the
      rules and regulations promulgated under the Securities Act of 1933, as amended
      (the “Act”), or in any registration statement filed with the SEC under the Act.
      Indemnitee acknowledges that paragraph (h) of Item 512 of Regulation S-K
      currently generally requires the Corporation to undertake in connection with
      any
      registration statement filed under the Act to submit the issue of the
      enforceability of Indemnitee’s rights under this Agreement in connection with
      any liability under the Act on public policy grounds to a court of appropriate
      jurisdiction and to be governed by any final adjudication of such issue.
      Indemnitee specifically agrees that any such undertaking shall supersede the
      provisions of this Agreement and to be bound by any such undertaking. A
      determination that Indemnitee is not entitled to indemnification pursuant to
      this Section 15(d) may be made by the Corporation upon receipt of a written
      opinion from Independent Counsel, a copy of which opinion shall be delivered
      to
      Indemnitee. In the event Indemnitee disputes such opinion, Indemnitee shall
      in
      any event be entitled to seek enforcement of its rights hereunder pursuant
      to
      Section 12 and Indemnitee shall be indemnified in connection with costs in
      seeking such enforcement.

     

    16. HEADINGS.

    

    The
      headings of the paragraphs of this Agreement are inserted for convenience only
      and shall not be deemed to constitute part of this Agreement or to affect the
      construction thereof.

     

    17. MODIFICATION
      AND WAIVER.

    

    No
      supplement, modification or amendment of this Agreement shall be binding unless
      executed in writing by both of the parties hereto. No amendment, alteration
      or
      repeal of this Agreement or of any provision hereof shall limit or restrict
      any
      right of Indemnitee under this Agreement in respect of any action taken or
      omitted by such Indemnitee in his or her Corporate Status prior to such
      amendment, alteration or repeal. To the extent that a change in the Code,
      whether by statute or judicial decision, permits greater indemnification or
      advancement of expenses than would be afforded currently under the Corporation’s
      Certificate of Incorporation, By-Laws and this Agreement, it is the intent
      of
      the parties hereto that Indemnitee shall enjoy by this Agreement the greater
      benefits so afforded by such change. No waiver of any of the provisions of
      this
      Agreement shall be deemed or shall constitute a waiver of any other provision
      hereof (whether or not similar) nor shall such waiver constitute a continuing
      waiver.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    18. SURVIVAL
      OF RIGHTS.
      Indemnitee’s rights hereunder shall continue after Indemnitee has ceased acting
      as an agent of the Corporation and shall inure to the benefit of the heirs,
      executors, administrators and assigns of Indemnitee. The obligations and duties
      of the Corporation to Indemnitee under this Agreement shall be binding on the
      Corporation and its successors and assigns. The Corporation shall require any
      successor (whether direct or indirect, by purchase, merger, consolidation or
      otherwise) to all or substantially all of the business or assets of the
      Corporation, expressly to assume and agree to perform this Agreement in the
      same
      manner and to the same extent that the Corporation would be required to perform
      if no such succession had taken place. No right or remedy herein conferred
      is
      intended to be exclusive of any other right or remedy, and every other right
      and
      remedy shall be cumulative and in addition to every other right and remedy
      given
      hereunder or now or hereafter existing at law or in equity or otherwise. The
      assertion or employment of any right or remedy hereunder, or otherwise, by
      Indemnitee shall not prevent the concurrent assertion or employment of any
      other
      right or remedy by Indemnitee.

     

    19. NOTICE
      BY INDEMNITEE.

    

    Indemnitee
      agrees promptly to notify the Corporation in writing upon being served with
      any
      summons, citation, subpoena, complaint, indictment, information or other
      document relating to any Proceeding or matter which may be subject to
      indemnification or advancement of Expenses covered hereunder; provided, however,
      that the failure to give any such notice shall not disqualify the Indemnitee
      from indemnification hereunder.

     

    20. NOTICES.

    

    All
      notices, requests, demands and other communications hereunder shall be in
      writing and shall be deemed to have been duly given if (i) delivered by hand
      to
      the party to whom said notice or other communication shall have been directed,
      or (ii) mailed by certified or registered mail with postage
      prepaid.

    

    (a) If
      to
      Indemnitee, to:

    

    [___________]

    

    (b) If
      to the
      Corporation, to:

    NU
      HORIZONS ELECTRONICS CORP.

    70
      Maxess
      Road

    Melville,
      NY 11747

    

    or
      to
      such other address as may have been furnished to Indemnitee by the Corporation
      or to the Corporation by Indemnitee, as the case may be.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    21. GOVERNING
      LAW.

    

    The
      parties agree that this Agreement shall be governed by, and construed and
      enforced in accordance with, the laws of the State of Delaware.

     

    22. COUNTERPARTS. 

    

    This
      Agreement, and any amendments thereto, may be executed and delivered in one
      or
      more counterparts, each of which shall for all purposes be deemed to be an
      original but all of which together shall constitute but one and the same
      Agreement. For purposes of this Agreement, a photographic, photostatic,
      facsimile, electronic, or similar reproduction and transmission by (or on behalf
      of) a party hereto on the signature page of this Agreement, any amendment to
      this Agreement, or other document or writing, as applicable, will have the
      same
      effect as that party signing and delivering that signature page in person to
      the
      applicable recipient thereof.

     

    23. ENTIRE
      AGREEMENT.
      

    

    This
      Agreement constitutes the entire agreement between the parties with respect
      to
      the subject matter hereof and supersedes all prior agreements, understandings
      and negotiations, written and oral, between the parties with respect to the
      subject matter of this Agreement; provided, however, that this Agreement is
      a
      supplement to and in furtherance of the Corporation’s Certificate of
      Incorporation, By-Laws, the Code and any other applicable law, and shall not
      be
      deemed a substitute therefor, and does not diminish or abrogate any
      rights of Indemnitee thereunder.

     

    
 

    [SIGNATURE
      PAGE
      FOLLOWS THIS PAGE]

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement on the day and year first above
      written.

    

    

    
      	
              ATTEST:

            	
              NU
                HORIZONS ELECTRONICS CORP.

            
	 	 
	 	 
	
              _____________________________

            	
              By:_______________________________

            
	 	 
	 	 
	 	
              INDEMNITEE:

            
	 	 
	 	 
	 	
              ___________________________________

            
	 	
              [___________________]

            

    

    

    

    

    

    
      
        
        

      

      
        14SECURITIES
      PURCHASE AGREEMENT

    

    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of June 30, 2008, by and among MOBILEPRO
      CORP.,
      a
      Delaware corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    

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

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase up to Thirteen Million, Three Hundred Ninety
      One
      Thousand, One Hundred Seventy Four Dollars and 54/100 ($13,391,174.54) of
      secured convertible debentures in the form attached hereto as “Exhibit
      A”
(the
      “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value $0.001
      (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”).
      Consideration for the purchase of the Convertible Debentures (the “Purchase
      Price,”
and
      the
      face value of the Convertible Debentures, the “Subscription
      Amount”)
      shall
      be only
      the
      exchange of debentures dated June 30, 2006 and May 11, 2007 (the “Existing
      Debentures”)
      previously issued by the Company to the Buyer. The purchase through exchange
      set
      forth herein shall take place at the “Closing.”
      

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, (i)
the
      Buyer, the Company, and each Subsidiary of the Company are executing and
      delivering a Global Security Agreement (all such security agreements shall
      be
      referred to as the “Security
      Agreement”)
      pursuant to which the Company and its wholly owned Subsidiaries agree to provide
      the Buyer a security interest in Pledged Property (as this term is defined
      in
      the Security Agreement), (ii) each Subsidiary of the Company is executing and
      delivering a Global Guaranty Agreement dated the date hereof (the “Guaranty”)
      and
      (iii) the Company and certain Subsidiaries of the Company are executing and
      delivering a Global Pledge Agreement (the “Pledge
      Agreement”
and
      collectively with the Security Agreement and the Guaranty, the “Security
      Documents”)
      in
      favor of the Buyer;
      and

     

    WHEREAS,
      the
      Convertible Debentures and the Conversion Shares collectively are referred
      to
      herein as the “Securities”.
      

     

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

     

    1. PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    (c) Form
      of Payment.
      Subject
      to the satisfaction of the terms and conditions of this Agreement, on the
      Closing Date, (i) the Buyers shall deliver to the Company the Existing
      Debentures; and (ii) the Company shall deliver to each Buyer, Convertible
      Debentures which such Buyer is purchasing at such Closing in amounts indicated
      opposite such Buyer’s name on Schedule I, duly executed on behalf of the
      Company.

     

    2. BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer represents and warrants, severally and not jointly, that:

     

    (a) Investment
      Purpose.
      Each
      Buyer is acquiring the Securities for its own account for investment only and
      not with a view towards, or for resale in connection with, the public sale
      or
      distribution thereof, except pursuant to sales registered or exempted under
      the
      Securities Act; provided, however, that by making the representations herein,
      such Buyer reserves the right to dispose of the Securities at any time in
      accordance with or pursuant to an effective registration statement covering
      such
      Securities or an available exemption under the Securities Act. Such Buyer does
      not presently have any agreement or understanding, directly or indirectly,
      with
      any Person to distribute any of the Securities. 

     

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

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

    (f) Transfer
      or Resale.
      Each
      Buyer understands that, except as set forth in existing agreements between
      the
      Buyer and the Company: (i) the Securities have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, (B) such Buyer shall have delivered to the Company an
      opinion of counsel, in a generally acceptable form, to the effect that such
      Securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements, or
      (C)
      such Buyer provides the Company with reasonable assurances (in the form of
      seller and broker representation letters) that such Securities can be sold,
      assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under
      the
      Securities Act, as amended (or a successor rule thereto) (collectively,
“Rule
      144”),
      in
      each case following the applicable holding period set forth therein; (ii) any
      sale of the Securities made in reliance on Rule 144 may be made only in
      accordance with the terms of Rule 144 and further, if Rule 144 is not
      applicable, any resale of the Securities under circumstances in which the
      seller (or the person through whom the sale is made) may be deemed to be an
      underwriter (as that term is defined in the Securities Act) may require
      compliance with some other exemption under the Securities Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register the Securities under the Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. 

     

    (g) Legends.
      Each
      Buyer agrees to the imprinting, so long as is required by this Section 2(g),
      of
      a restrictive legend in substantially the following form:

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    Certificates
      evidencing the Conversion Shares shall not contain any legend (including the
      legend set forth above), (i) while a registration statement (including the
      Registration Statement) covering the resale of such security is effective under
      the Securities Act, (ii) following any sale of such Conversion Shares pursuant
      to Rule 144, (iii) if such Conversion Shares are eligible for sale under Rule
      144, or (iv) if such legend is not required under applicable requirements of
      the
      Securities Act (including judicial interpretations and pronouncements issued
      by
      the staff of the SEC). The Company shall cause its counsel to issue a legal
      opinion to the Company’s transfer agent promptly after the effective date (the
“Effective
      Date”)
      of a
      Registration Statement if required by the Company’s transfer agent to effect the
      removal of the legend hereunder. If all or any portion of the Convertible
      Debentures are exercised by a Buyer that is not an Affiliate of the Company
      (a
“Non-Affiliated
      Buyer”)
      at a
      time when there is an effective registration statement to cover the resale
      of
      the Conversion Shares, such Conversion Shares shall be issued free of all
      legends. The Company agrees that following the Effective Date or at such time
      as
      such legend is no longer required under this Section 2(g), it will, no later
      than three (3) Trading Days following the delivery by a Non-Affiliated Buyer
      to
      the Company or the Company’s transfer agent of a certificate representing
      Conversion Shares, as the case may be, issued with a restrictive legend (such
      third Trading Day, the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Non-Affiliated Buyer a certificate
      representing such shares that is free from all restrictive and other legends.
      The Company may not make any notation on its records or give instructions to
      any
      transfer agent of the Company that enlarge the restrictions on transfer set
      forth in this Section. Each Buyer acknowledges that the Company’s agreement
      hereunder to remove all legends from Conversion Shares is not an affirmative
      statement or representation that such Conversion Shares are freely tradable.
      Each Buyer, severally and not jointly with the other Buyers, agrees that the
      removal of the restrictive legend from certificates representing Securities
      as
      set forth in this Section 2(g) is predicated upon the Company’s reliance that
      such Buyer will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom, and that if Securities are sold
      pursuant to a Registration Statement, they will be sold in compliance with
      the
      plan of distribution set forth therein.

     

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

     

    (i) Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein and
      the Transaction Documents (as defined herein); (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-K for the
      fiscal year ended March 31, 2007; (iv) the Company’s Form 10-Q for the fiscal
      quarter ended December 31, 2007 and (v) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

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

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    Except
      as
      set forth under the corresponding section of the Disclosure Schedules, which
      Disclosure Schedules shall be deemed a part hereof and to qualify any
      representation or warranty otherwise made herein to the extent of such
      disclosure, the Company hereby makes the representations and warranties set
      forth below to each Buyer: 

     

    (a) Subsidiaries.
      All of
      the direct and indirect Subsidiaries (other than Excluded Subsidiaries, listed
      on Schedule
      4(d)
      attached
      hereto) of the Company are set forth on Schedule
      3(a)
      (each a
“Subsidiary”
and
      collectively, the “Subsidiaries”).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any liens, and all the issued
      and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities.

     

    (b) Organization
      and Qualification.
      Other
      than as set forth on Schedule
      3(b)
      attached
      hereto, the Company and its Subsidiaries are corporations duly organized and
      validly existing in good standing under the laws of the jurisdiction in which
      they are incorporated, and have the requisite corporate power to own their
      properties and to carry on their business as now being conducted. Other than
      as
      set forth on Schedule
      3(b),
      each of
      the Company and its Subsidiaries is duly qualified as a foreign corporation
      to
      do business and is in good standing in every jurisdiction in which the nature
      of
      the business conducted by it makes such qualification necessary, except to
      the
      extent that the failure to be so qualified or be in good standing would not
      have
      or reasonably be expected to result in (i) a material adverse effect on the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business or
      condition (financial or otherwise) of the Company and the Subsidiaries, taken
      as
      a whole, or (iii) a material adverse effect on the Company’s ability to perform
      in any material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”)
      and no
      proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (c) Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) the Company and each Subsidiary has the requisite corporate power and
      authority to enter into and perform its obligations under this Agreement and
      the
      Convertible Debentures (together with the Security Documents, collectively
      the
“Transaction
      Documents”)
      (in
      each case, to the extent each is a party thereto) and to issue the Securities
      in
      accordance with the terms hereof and thereof, (ii) the execution and delivery
      of
      the Transaction Documents by the Company and each Subsidiary (to the extent
      each
      is a party thereto) and the consummation by each of them of the transactions
      contemplated hereby and thereby, including, without limitation, the issuance
      of
      the Securities by the Company, the reservation for issuance and the issuance
      of
      the Conversion Shares by the Company (other than as provided in Section 4(d)
      hereof), and the reservation for issuance and the issuance of the Warrant Shares
      by the Company (other than as provided in Section 4(d) hereof), have been duly
      authorized by the Company’s or each applicable Subsidiary’s Board of Directors
      and no further consent or authorization is required by the Company or any
      applicable Subsidiary, any Boards of Directors or stockholders, (iii) the
      Transaction Documents have been duly executed and delivered by the Company
      and
      each Subsidiary (to the extent each is a party thereto), (iv) the Transaction
      Documents constitute the valid and binding obligations of the Company and each
      Subsidiary (to the extent each is a party thereto), enforceable against the
      each
      of them in accordance with their terms, except as such enforceability may be
      limited by general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and remedies. The
      authorized officer of the Company and each Subsidiary executing the Transaction
      Documents knows of no reason why the Company cannot file the Registration
      Statement as required under the Registration Rights Agreement or perform any
      of
      the Company’s or such Subsidiary’s other obligations under the Transaction
      Documents. 

     

    (d) Capitalization.
      The
      authorized capital stock of the Company consists of 1,500,000,000 shares of
      Common Stock and 20,035,425 shares of Preferred Stock, par value $.001
      (“Preferred
      Stock”)
      of
      which 775,821,796 shares of Common Stock and 35,378 shares of Preferred Stock
      are issued and outstanding. All of the outstanding shares of capital stock
      of
      the Company are validly issued, fully paid and nonassessable, have been issued
      in compliance with all federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or similar
      rights to subscribe for or purchase securities. Except as disclosed in
Schedule
      3(d):
      (i)
      none of the Company’s capital stock is subject to preemptive rights or any other
      similar rights or any liens or encumbrances suffered or permitted by the
      Company; (ii) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, or exercisable or exchangeable for,
      any
      capital stock of the Company or any of its Subsidiaries, or contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      Subsidiaries is or may become bound to issue additional capital stock of the
      Company or any of its Subsidiaries or options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, or exercisable or exchangeable for,
      any
      capital stock of the Company or any of its Subsidiaries; (iii) there are no
      outstanding debt securities, notes, credit agreements, credit facilities or
      other agreements, documents or instruments evidencing indebtedness of the
      Company or any of its Subsidiaries or by which the Company or any of its
      Subsidiaries is or may become bound; (iv) there are no financing statements
      securing obligations in any material amounts, either singly or in the aggregate,
      filed in connection with the Company or any of its Subsidiaries; (v) there
      are
      no outstanding securities or instruments of the Company or any of its
      Subsidiaries which contain any redemption or similar provisions, and there
      are
      no contracts, commitments, understandings or arrangements by which the Company
      or any of its Subsidiaries is or may become bound to redeem a security of the
      Company or any of its Subsidiaries; (vi) there are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Securities; (vii) the Company does not have any stock
      appreciation rights or “phantom stock” plans or agreements or any similar plan
      or agreement; and (viii) the Company and its Subsidiaries have no liabilities
      or
      obligations required to be disclosed in the SEC Documents but not so disclosed
      in the SEC Documents, other than those incurred in the ordinary course of the
      Company's or its Subsidiaries' respective businesses and which, individually
      or
      in the aggregate, do not or would not have a Material Adverse Effect. The
      Company has furnished to the Buyers true, correct and complete copies of the
      Company’s and each Subsidiary’s Certificate of Incorporation, as amended and as
      in effect on the date hereof (the “Certificates
      of Incorporation”),
      and
      the Company’s and each Subsidiary’s Bylaws, as amended and as in effect on the
      date hereof (the “Bylaws”),
      and
      the terms of all securities convertible into, or exercisable or exchangeable
      for, shares of Common Stock and the material rights of the holders thereof
      in
      respect thereto. No further approval or authorization of any stockholder, the
      Board of Directors of the Company or others is required for the issuance and
      sale of the Securities. There are no stockholders agreements, voting agreements
      or other similar agreements with respect to the Company’s capital stock to which
      the Company is a party or, to the knowledge of the Company, between or among
      any
      of the Company’s stockholders. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (e) Issuance
      of Securities.
      The
      issuance of the Convertible Debentures is duly authorized and free from all
      taxes, liens and charges with respect to the issue thereof. Upon conversion
      in
      accordance with the terms of the Convertible Debentures or exercise in
      accordance with the Warrants, as the case may be, the Conversion Shares and
      Warrant Shares, respectively, when issued will be validly issued, fully paid
      and
      nonassessable, free from all taxes, liens and charges with respect to the issue
      thereof. 

     

    (f) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and its Subsidiaries (to the extent each is a party thereto) and the
      consummation by the Company and its Subsidiaries (to the extent each is a party
      thereto) of the transactions contemplated hereby and thereby (including, without
      limitation, the issuance of the Convertible Debentures, and reservation for
      issuance and issuance of the Conversion Shares) will not (i) result in a
      violation of any Certificates of Incorporation, certificate of formation, any
      certificate of designations or other constituent documents of the Company or
      any
      of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries
      or Bylaws of the Company or any of its Subsidiaries or (ii) conflict with,
      or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) in any respect under, or give to others any rights
      of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which the Company or any of its Subsidiaries is
      a
      party, or (iii) result in a violation of any law, rule, regulation, order,
      judgment or decree (including foreign, federal and state securities laws and
      regulations and the rules and regulations of the National Association of
      Securities Dealers Inc.’s OTC Bulletin Board) applicable to the Company or any
      of its Subsidiaries or by which any property or asset of the Company or any
      of
      its Subsidiaries is bound or affected; except in the case of each of clauses
      (ii) and (iii), such as could
      not, individually or in the aggregate, have or reasonably be expected to result
      in a Material Adverse Effect.
      The
      business of the Company and its Subsidiaries is not being conducted, and shall
      not be conducted in violation of any material law, ordinance, or regulation
      of
      any governmental entity. Except as specifically contemplated by this Agreement
      and as required under the Securities Act and any applicable state securities
      laws, the Company is not required to obtain any consent, authorization or order
      of, or make any filing or registration with, any court or governmental agency
      in
      order for it to execute, deliver or perform any of its obligations under or
      contemplated by this Agreement in accordance with the terms hereof or thereof.
      All consents, authorizations, orders, filings and registrations which the
      Company is required to obtain pursuant to the preceding sentence have been
      obtained or effected on or prior to the date hereof. The Company and its
      Subsidiaries are unaware of any facts or circumstance, which might give rise
      to
      any of the foregoing.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (g) SEC
      Documents; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the SEC under the Securities Exchange Act of
      1934, as amended (the “Exchange
      Act”),
      for
      the two years preceding the date hereof (or such shorter period as the Company
      was required by law or regulation to file such material) (all of the foregoing
      filed prior to the date hereof or amended after the date hereof and all exhibits
      included therein and financial statements and schedules thereto and documents
      incorporated by reference therein, being hereinafter referred to as the
“SEC
      Documents”)
      on
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Document prior to the expiration of any such extension.
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at http://www.sec.gov., true and complete copies of
      the SEC Documents. As of their respective dates, the SEC Documents complied
      in
      all material respects with the requirements of the Exchange Act and the rules
      and regulations of the SEC promulgated thereunder applicable to the SEC
      Documents, and none of the SEC Documents, at the time they were filed with
      the
      SEC, contained any untrue statement of a material fact or omitted to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading. As of their respective dates, the financial statements
      of
      the Company included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the SEC with respect thereto. Such financial statements have
      been
      prepared in accordance with generally accepted accounting principles,
      consistently applied, during the periods involved (except (i) as may be
      otherwise indicated in such financial statements or the notes thereto, or (ii)
      in the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements) and fairly present in
      all
      material respects the financial position of the Company as of the dates thereof
      and the results of its operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments). No other information provided by or on behalf of the Company
      to
      the Buyers which is not included in the SEC Documents, including, without
      limitation, information referred to in Section 2(i) of this Agreement, contains
      any untrue statement of a material fact or omits to state any material fact
      necessary in order to make the statements therein, in the light of the
      circumstance under which they are or were made and not misleading. 

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (i) Absence
      of Litigation.
      Other
      than as disclosed on Schedule
      3(i)
      attached
      hereto, there is no action, suit, proceeding, inquiry or investigation before
      or
      by any court, public board, government agency, self-regulatory organization
      or
      body pending against or affecting the Company, the Common Stock or any of the
      Company’s Subsidiaries, wherein an unfavorable decision, ruling or finding would
      have a Material Adverse Effect.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

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

     

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

     

    (q) Insurance.
      The
      Company and each of its Subsidiaries is insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its Subsidiaries are engaged. Neither the Company
      nor
      any such Subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such Subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its Subsidiaries, taken as a
      whole.

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (t) No
      Material Adverse Breaches, etc.
      Neither
      the Company nor any of its Subsidiaries is subject to any charter, corporate
      or
      other legal restriction, or any judgment, decree, order, rule or regulation
      which in the judgment of the Company’s officers has or is expected in the future
      to have a Material Adverse Effect on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      Subsidiaries. Neither the Company nor any of its Subsidiaries is in breach
      of
      any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a Material Adverse Effect on the business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or its Subsidiaries.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (y) Registration
      Rights.
      Other
      than each of the Buyers, no Person has any right to cause the Company to effect
      the registration under the Securities Act of any securities of the Company.
      There are no outstanding registration statements not yet declared effective
      and
      there are no outstanding comment letters from the SEC or any other regulatory
      agency.

     

    (z) Private
      Placement.
      Assuming the accuracy of the Buyers’ representations and warranties set forth in
      Section 2, no registration under the Securities Act is required for the offer
      and sale of the Securities by the Company to the Buyers as contemplated hereby.
      The issuance and sale of the Securities hereunder does not contravene the rules
      and regulations of the Primary Market.

     

    (aa) Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
      Exchange Act, and the Company has taken no action designed to terminate, or
      which to its knowledge is likely to have the effect of, terminating the
      registration of the Common Stock under the Exchange Act nor has the Company
      received any notification that the SEC is contemplating terminating such
      registration. The Company has not, in the twelve (12) months preceding the
      date
      hereof, received notice from any Primary Market on which the Common Stock is
      or
      has been listed or quoted to the effect that the Company is not in compliance
      with the listing or maintenance requirements of such Primary Market. The Company
      is, and has no reason to believe that it will not in the foreseeable future
      continue to be, in compliance with all such listing and maintenance
      requirements.

     

    (bb) Reporting
      Status. 
      With a view to making available to the Buyer the benefits of Rule 144 or any
      similar rule or regulation of the SEC that may at any time permit the Buyer
      to
      sell securities of the Company to the public without registration, and as a
      material inducement to the Buyer’s purchase of the Securities, the Company
      represents and warrants to the following: (i)
      the
      Company is, and has been for a period of at least 90 days immediately preceding
      the date hereof, subject to the reporting requirements of section 13 or 15(d)
      of
      the Exchange Act and has filed all required reports under section 13 or 15(d)
      of
      the Exchange, as applicable, during the 12 months preceding the date hereof
      (or
      for such shorter period that the Company was required to file such
      reports),
      and
      (ii) the Company is not and for at least the last 12 months prior to the date
      hereof has not been a “shell company,” as defined in paragraph (i)(1)(i) of Rule
      144;

     

    (cc) Manipulation
      of Price. 
      The Company has not, and to its knowledge no one acting on its behalf has,
      (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or paid any compensation for soliciting purchases of, any of the
      Securities, or (iii) paid or agreed to pay to any Person any compensation for
      soliciting another to purchase any other securities of the Company, other than,
      in the case of clauses (ii) and (iii), compensation paid to the Company’s
      placement agent in connection with the placement of the Securities.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (dd) Dilutive
      Effect.
      The
      Company understands and acknowledges that the number of Conversion Shares
      issuable upon conversion of the Convertible Debentures and the Warrant Shares
      issuable upon exercise of the Warrants will increase in certain circumstances.
      The Company further acknowledges that its obligation to issue Conversion Shares
      upon conversion of the Convertible Debentures in accordance with this Agreement
      and the Convertible Debentures and its obligation to issue the Warrant Shares
      upon exercise of the Warrants in accordance with this Agreement and the
      Warrants, in each case, is absolute and unconditional regardless of the dilutive
      effect that such issuance may have on the ownership interests of other
      stockholders of the Company.

     

    4. COVENANTS.

     

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

     

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

     

    (c) Reporting
      Status.
      With a
      view to making available to the Buyer the benefits of Rule 144 or any similar
      rule or regulation of the SEC that may at any time permit the Buyer to sell
      securities of the Company to the public without registration, and as a material
      inducement to the Buyer’s purchase of the Securities, the Company represents,
      warrants, and covenants to the following: 

     

    (i) The
      Company is subject to the reporting requirements of section 13 or 15(d) of
      the
      Exchange Act and has filed all required reports under section 13 or 15(d) of
      the
      Exchange Act during the 12 months prior to the date hereof (or for such shorter
      period that the issuer was required to file such reports), other than Form
      8-K
      reports; 

     

    (ii) from
      the
      date hereof until all the Securities either have been sold by the Buyer, or
      may
      permanently be sold by the Buyer without any restrictions pursuant to Rule
      144,
      (the “Registration
      Period”)
      the
      Company shall file with the SEC in a timely manner all required reports under
      section 13 or 15(d) of the Exchange Act and such reports shall conform to the
      requirement of the Exchange Act and the SEC for filing thereunder; 

     

    (iii) The
      Company shall furnish to the Buyer so long as the Buyer owns Securities,
      promptly upon request, (i) a written statement by the Company that it has
      complied with the reporting requirements of Rule 144, (ii) a copy of the most
      recent annual or quarterly report of the Company and such other reports and
      documents so filed by the Company, and (iii) such other information as may
      be
      reasonably requested to permit the Buyers to sell such securities pursuant
      to
      Rule 144 without registration; and 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (iv) During
      the Registration Period the Company shall not terminate its status as an issuer
      required to file reports under the Exchange Act even if the Exchange Act or
      the
      rules and regulations thereunder would otherwise permit such
      termination.

     

    (d) Reservation
      of Shares.
      The
      Company represents that it has, or, as provided in this Section 4(d) below,
      will
      have, sufficient authorized and unissued shares of Common Stock to effectuate
      conversion of the Convertible Debentures by the Buyer (the “Share
      Reserve”);
      provided that the Company shall take all action reasonably necessary to at
      all
      times have authorized, and reserved for the purpose of issuance, such number
      of
      shares of Common Stock as shall be necessary to effect the full conversion
      of
      the Convertible Debentures. If at any time the Share Reserve is insufficient
      to
      effect the full conversion of the Convertible Debentures or the full exercise
      of
      the Warrants, the Company shall increase the Share Reserve accordingly. If
      the
      Company does not have sufficient authorized and unissued shares of Common Stock
      available to increase the Share Reserve, at the next regularly scheduled annual
      meeting of the shareholders, the Company shall propose to the shareholders
      for
      approval of either (i) not more than a one-for-ten reverse stock split of the
      Common Stock of the Company; (ii) increasing the number of shares authorized;
      or
      (iii) such other action as the Company, with the consent of the Buyers, shall
      deem necessary to establish and maintain the Share Reserve. The Company’s
      management shall recommend to the shareholders to vote in favor of, and
      management of the Company shall also vote all of its shares in favor of, such
      action with respect to establishing and/or maintaining the Share
      Reserve.

     

    (e) Listings
      or Quotation.
      The
      Company’s Common Stock shall be listed or quoted for trading on any of (a) the
      American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global
      Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board
      (which does not include the Pink Sheets LLC) (“OTCBB”)
      (each,
      a “Primary
      Market”).
      The
      Company shall promptly secure the listing of all of the Registrable Securities
      (as defined in the Registration Rights Agreement) upon each national securities
      exchange and automated quotation system, if any, upon which the Common Stock
      is
      then listed (subject to official notice of issuance) and shall maintain such
      listing of all Registrable Securities from time to time issuable under the
      terms
      of the Transaction Documents. 

     

    (f) Fees
      and Expenses.
      

     

    (i) The
      Company shall pay all of its costs and expenses, including, without limitation,
      attorney’s fees and expenses, incurred by it connection with the negotiation,
      investigation, preparation, execution and delivery of the Transaction Documents.
      

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

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

     

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

     

    (j) Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, without
      the prior written consent of the Buyer(s), (i) issue or sell shares of Common
      Stock or Preferred Stock without consideration or for a consideration per share
      less than the bid price of the Common Stock determined immediately prior to
      its
      issuance, (ii) issue any preferred stock, warrant, option, right, contract,
      call, or other security or instrument granting the holder thereof the right
      to
      acquire Common Stock without consideration or for a consideration less than
      such
      Common Stock’s Bid Price determined immediately prior to its issuance, (iii)
      enter into any security instrument granting the holder a security interest
      in
      any and all assets of the Company, or (iv) file any registration statement
      on
      Form S-8.

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (l) Review
      of Public Disclosures.
      All SEC
      filings (including, without limitation, all filings required under the Exchange
      Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other
      public disclosures made by the Company, including, without limitation, all
      press
      releases, investor relations materials, and scripts of analysts meetings and
      calls, shall be reviewed and approved for release by the Company’s attorneys
      and, if containing financial information, the Company’s independent certified
      public accountants.

     

    (m) Disclosure
      of Transaction.
      Within
      four Business Days following the date of this Agreement, the Company shall
      file
      a Current Report on Form 8-K or an Annual Report on form 10-K, whichever may
      be
      authorized or required under Exchange Act Regulations, describing the terms
      of
      the transactions contemplated by the Transaction Documents in the form required
      by the Exchange Act and attaching the material Transaction Documents (including,
      without limitation, this Agreement, the form of the Convertible Debenture,
      the
      form of Warrant and the form of the Registration Rights Agreement) as exhibits
      to such filing.

     

    5. TRANSFER
      AGENT INSTRUCTIONS.

     

    (a) The
      Irrevocable Transfer Agent Instructions among the Company, the Buyer, and
      Interwest Transfer Company, Inc. (the “Transfer
      Agent”)
      shall
      remain in effect and shall apply to the Convertible Debentures on the same
      terms
      as they applied to the Existing Debentures. The Company shall notify the
      Transfer Agent in writing promptly after the Closing that the Existing
      Debentures have been exchanged for the Convertible Debentures and shall execute
      any documents required by the Transfer Agent to ensure that the terms of the
      Irrevocable Transfer Agent Instructions shall be applicable on the same terms
      to
      the Convertible Debentures as they were to the Existing Debentures. The Company
      shall not change its transfer agent without the express written consent of
      the
      Buyers, which may be withheld by the Buyers in their sole discretion. The
      Company warrants that no instruction other than the Irrevocable Transfer Agent
      Instructions referred to in this Section 5, and stop transfer instructions
      to
      give effect pursuant to Section 2(g) hereof (in the case of the Conversion
      Shares prior to registration of such shares under the Securities Act) will
      be
      given by the Company to Transfer Agent, and that the Securities shall otherwise
      be freely transferable on the books and records of the Company as and to the
      extent provided in this Agreement and the other Transaction Documents. If a
      Buyer effects a sale, assignment or transfer of the Securities in accordance
      with Section 2(f), the Company shall promptly instruct Transfer Agent to issue
      one or more certificates or credit shares to the applicable balance accounts
      at
      DTC in such name and in such denominations as specified by such Buyer to effect
      such sale, transfer or assignment and, with respect to any transfer, shall
      permit the transfer. In the event that such sale, assignment or transfer
      involves Conversion Shares sold, assigned or transferred pursuant to an
      effective registration statement or pursuant to Rule 144, the Transfer Agent
      shall issue such Securities to the Buyer, assignee or transferee, as the case
      may be, without any restrictive legend. Nothing in this Section 5 shall affect
      in any way the Buyer’s obligations and agreement to comply with all applicable
      securities laws upon resale of Conversion Shares. The Company acknowledges
      that
      a breach by it of its obligations hereunder will cause irreparable harm to
      the
      Buyer by vitiating the intent and purpose of the transaction contemplated
      hereby. Accordingly, the Company acknowledges that the remedy at law for a
      breach of its obligations under this Section 5 will be inadequate and agrees,
      in
      the event of a breach or threatened breach by the Company of the provisions
      of
      this Section 5, that the Buyer(s) shall be entitled, in addition to all
      other available remedies, to an injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    (b) The
      Buyer(s) shall have delivered to the Company the Existing
      Debentures.

     

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

     

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

     

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

     

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

     

    (ii) The
      Common Stock shall be authorized for quotation or trading on the Primary Market,
      trading in the Common Stock shall not have been suspended for any reason, and
      all the Conversion Shares issuable upon the conversion of the Convertible
      Debentures shall be approved for listing or trading on the Primary Market.
      

     

    (iii) The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the Closing Date

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

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

     

    (v) The
      Company shall have provided all information reasonably requested by the Buyer
      in
      connection with the preparation of the Security Documents.

     

    (vi) The
      Company shall cause counsel to the Company and its Subsidiaries to deliver
      an
      opinion of counsel, in form and substance reasonably acceptable to
      Buyers.

     

    8. INDEMNIFICATION.

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

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

     

    9. GOVERNING
      LAW: MISCELLANEOUS.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

     

    
      	
              If
                to the Company, to:

            	
              Mobilepro
                Corp.

            
	 	
              6701
                Democracy Blvd., Suite 202

            
	 	
              Bethesda,
                MD 20817

            
	 	
              Attention:
                Jay Wright, Chairman and Chief Executive Officer

            
	 	
              Telephone:
                (301) 571-3476

            
	 	
              Facsimile:
                (301) 315-9027

            
	 	 
	
              With
                a copy to: 

            	
              Seyfarth
                Shaw LLP

            
	 	
              815
                Connecticut Avenue, NW, Suite 500

            
	 	
              Washington,
                DC 20006-4004

            
	 	
              Attention: Ernest
                M. Stern, Esquire

            
	 	
              Telephone: (202)
                828-5360 

            
	 	
              Facsimile: (202)
                828-5393 

            
	 	 
	 	 

    

     

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

     

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

     

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

     

    (i) Survival.
      Unless
      this Agreement is terminated under Section 9(l), all agreements, representations
      and warranties contained in this Agreement or made in writing by or on behalf
      of
      any party in connection with the transactions contemplated by this Agreement
      shall survive the execution and delivery of this Agreement and the
      Closing.

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

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

     

    (l) Brokerage.
      The
      Company represents that no broker, agent, finder or other party has been
      retained by it in connection with the transactions contemplated hereby and
      that
      no other fee or commission has been agreed by the Company to be paid for or
      on
      account of the transactions contemplated hereby. 

     

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

     

    

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    

    
      	 	
              COMPANY:

            
	 	
              MOBILEPRO
                CORP. 

            
	 	 
	 	
              By:
                /s/ Jay
                Wright                                
                

            
	 	
              Name: Jay
                Wright

            
	 	
              Title: Chairman
                and CEO

            
	 	 

    

    

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    

    
      	 	
              BUYERS:

            
	 	
              YA
                GLOBAL INVESTMENTS, L.P. 

            
	 	 
	 	
              By:
                 Yorkville
                Advisors, LLC 

            
	 	
              Its: Investment
                Manager

            
	 	 
	 	 
	 	
              By:
                /s/ Jerry
                Eicke                           
                

            
	 	
              Name: Jerry
                Eicke

            
	 	
              Its: Managing
                Member

            

    

    

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

     

    

    

    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            	
              (6)

            	
              (7)

            	
              (8)

            
	
              Buyer
                

            	
              Subscription
                Amount

            	 	 	 	
              Legal
                Representative’s Address and Facsimile Number

            
	 	
              Closing

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              YA
                Global Investments, L.P.

               

              101
                Hudson Street, Suite 3700

              Jersey
                City, NJ 07302

              Attention:
                Mark Angelo

              Telephone:
                (201) 985-8300

              Facsimile:
                (201) 985-8266

              Residence:
                Cayman Islands

            	
              ___________

            	 	 	 	 	 	
              Troy
                Rillo or David Gonzalez, Esq.

              101
                Hudson Street, Suite 3700

              Jersey
                City, New Jersey 07302 

              Telephone:
                (201) 985-8300 

              Facsimile:
                (201) 985-8266

            
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LIST
      OF EXHIBITS:

    

    Disclosure
      Schedule

    Schedule
      3(a) - Subsidiaries

    Schedule
      3(b) - Organization and Qualification

    Schedule
      3(d) - Capitalization

    Schedule
      3(i) - Litigation

    Schedule
      3(n) - Intellectual Property

    Schedule
      3(u) - Tax Status

    Schedule
      4(d) - Excluded Subsidiaries

    

    Exhibit
      A
      - Form of Convertible Debentures

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    DISCLOSURE
      SCHEDULE

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