Document:

NEITHER
        THIS WARRANT NOR THE UNDERLYING COMMON STOCK OF INTERSTATE DATA USA, INC.
        HAS
        BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
        STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
        MAY BE
        OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
        TO
        AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
        FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL
        FOR THE COMPANY, IS AVAILABLE. 

       

      COMMON
        STOCK PURCHASE WARRANT 

       

      
        	No. W-_______
                	 	
                _______Shares

              

      

       

      FOR
        VALUE
        RECEIVED, Interstate Data USA, Inc., a Delaware corporation (the “Company”),
        hereby certifies _________ (the “Warrantholder”) or the Warrantholder’s
        permitted assigns are entitled to purchase from the Company, at any time
        or from
        time to time during the period commencing on September 28, 2007 (the
“Commencement Date”), and ending prior to 5:00 p.m. on September 28, 2010 (the
“Expiration Date”) ________ fully paid and non-assessable shares of common
        stock, $0.001 par value, of the Company at a purchase price of $4.50 per
        share
        (the “Purchase Price”). (Hereinafter, (i) said common stock, together with any
        other equity securities which may be issued by the Company with respect thereto
        or in substitution therefor, is referred to as the “Common Stock,” (ii) the
        shares of the Common Stock purchasable hereunder are referred to as the “Warrant
        Shares,” (iii) the aggregate purchase price payable hereunder for the Warrant
        Shares is referred to as the “Aggregate Warrant Price,” (iv) the price payable
        hereunder for each of the Warrant Shares is referred to as the “Per Share
        Warrant Price” and (v) this warrant and all warrants hereafter issued in
        exchange or substitution for this warrant are referred to as the “Warrants”).
        The Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
        Price is subject to adjustment as hereinafter provided; in the event of any
        such
        adjustment, the number of Warrant Shares shall be adjusted by dividing the
        Aggregate Warrant Price by the Per Share Warrant Price in effect immediately,
        after such adjustment.

       

      This
        Warrant is issued pursuant to, and is subject to the terms and conditions
        of,
        the Subscription Agreement dated September 28, 2007 by and between the Company
        and the Warrantholder (the "Subscription Agreement").

       

      1. Exercise
        of Warrant.

       

      (a) This
        Warrant may be exercised, in whole or in part at any time or in part from
        time
        to time, during the period commencing on the Commencement Date, and ending
        at
        5:00 p.m., Eastern time, on the Expiration Date, by the Warrantholder by
        the
        surrender of this Warrant (with the purchase form attached hereto as Exhibit
        A)
        at the address set forth in Subsection 9(a) hereof, together with proper
        payment
        of the Aggregate Warrant Price, or the proportionate part thereof if this
        Warrant is exercised in part (the "Exercise Price"). Payment for the Warrant
        Shares shall be made either (i) in accordance with paragraph 1(b) below,
        or (ii)
        by check payable to the order of the Company, in the amount of the Exercise
        Price. If this Warrant is exercised in part, this Warrant must be exercised
        for
        a number of whole shares of the Common Stock, and the Warrantholder is entitled
        to receive a new Warrant covering the number of Warrant Shares in respect
        of
        which this Warrant has not been exercised and setting forth the proportionate
        part of the Aggregate Warrant Price applicable to such Warrant Shares. Upon
        such
        exercise and surrender of this Warrant, the Company will (i) issue a certificate
        or certificates in the name of the Warrantholder for the number of whole
        shares
        of the Common Stock to which the Warrantholder shall be entitled and, if
        this
        Warrant is exercised in whole, pay, in lieu of any fractional share of the
        Common Stock to which the Warrantholder shall be entitled, cash equal to
        the
        fair value of such fractional share (determined in such reasonable manner
        as the
        Board of Directors of the Company shall determine), and (ii) deliver the
        other
        securities and properties receivable upon the exercise of this Warrant, or
        the
        proportionate part thereof if this Warrant is exercised in part, pursuant
        to the
        provisions of this Warrant.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b) If
        the
        Common Stock is registered under Section 12 of the Securities Exchange Act
        of
        1934, as amended, the Warrantholder may elect to pay all or part of the Exercise
        Price by surrendering shares of Common Stock to the Company, including by
        allowing the Company to deduct from the number of Warrant Shares deliverable
        upon exercise of this Warrant, a number of such shares having an aggregate
        Fair
        Market Value, determined as of the day preceding the date of exercise of
        this
        Warrant, equal to the Aggregate Warrant Price. “Fair Market Value” per share of
        Common Stock on any relevant date shall be determined in accordance with
        the
        following provisions:

       

      
        	 	
                (i)

              	
                If
                  the Common Stock is at the time traded on the OTC Bulletin Board
                  or other
                  electronic quotation service, then the Fair Market Value shall
                  be the
                  closing selling price per share of Common Stock on the date in
                  question,
                  as such price is reported by the National Association of Securities
                  Dealers on the OTC Bulletin Board or other electronic quotation
                  service,
                  as the case may be. If there is no closing selling price for the
                  Common
                  Stock on the date in question, then the Fair Market Value shall
                  be the
                  closing selling price on the last preceding date for which such
                  quotation
                  exists; or

              

      

       

      
        	 	
                (ii)

              	
                If
                  the Common Stock is at the time listed on any Exchange, then the
                  Fair
                  Market Value shall be the closing selling price per share of Common
                  Stock
                  on the date in question on the Exchange determined by the Administrator
                  to
                  be the primary market for the Common Stock, as such price is officially
                  quoted in the composite tape of transactions on such Exchange.
                  If there is
                  no closing selling price for the Common Stock on the date in question,
                  then the Fair Market Value shall be the closing selling price on
                  the last
                  preceding date for which such quotation exists. "Exchange"
                  shall mean any organization, association, or group of persons,
                  whether
                  incorporated or unincorporated, which constitutes, maintains, or
                  provides
                  a market place or facilities for bringing together purchasers and
                  sellers
                  of securities or for otherwise performing with respect to securities
                  the
                  functions commonly performed by a stock exchange as that term is
                  generally
                  understood, and includes the market place and the market facilities
                  maintained by such exchange.

              

      

       

      2. Reservation
        of Warrant Shares.

       

      So
        long
        as this Warrant is exercisable, the Company will at all times have authorized
        and in reserve, and will keep available, solely for issuance or delivery
        upon
        the exercise of this Warrant, such number of shares of the Common Stock and
        such
        amount of other securities and properties as from time to time shall be
        deliverable to the Warrantholder upon the exercise of this Warrant, free
        and
        clear of all restrictions on sale or transfer (except such as may be imposed
        under applicable federal and state securities laws) and free and clear of
        all
        preemptive rights and all other rights to purchase securities of the
        Company.

       

      3. Fully
        Paid Stock.

       

      The
        shares of the Common Stock issuable upon exercise of this Warrant in accordance
        with the terms hereof shall, at the time of such issuance, be validly issued,
        fully paid and non-assessable and not subject to preemptive rights or other
        contractual rights to purchase securities of the Company.

       

      4. Limited
        Transferability.

       

      This
        Warrant and all rights hereunder are being issued in connection with the
        issuance of the Warrant Shares and are transferable, in whole or in part,
        only
        with the prior written consent of the Company, in compliance with this Section
        and with applicable law, upon surrender of this Warrant with a properly executed
        assignment (in the form of Exhibit B or Exhibit C attached hereto) at the
        principal office of the Company. By acceptance hereof, the Warrantholder
        represents and warrants that this Warrant is being acquired, and all Warrant
        Shares to be purchased upon the exercise of this Warrant will be acquired,
        by
        the Warrantholder for investment, solely for the account of such Warrantholder
        and not with a view to the fractionalization or distribution thereof and
        may not
        be sold or transferred except in accordance with the applicable provisions
        of
        the Securities Act of 1933, as amended (the "Securities Act"), and the rules
        and
        regulations of the Securities and Exchange Commission promulgated thereunder,
        and the Warrantholder agrees that neither this Warrant nor any of the Warrant
        Shares may be sold or transferred except pursuant to an effective registration
        statement under the Act or pursuant to an opinion, in form and substance
        reasonably acceptable to the Company’s counsel, that registration under the Act
        is not required in connection with such sale or transfer. The Warrantholder
        shall deliver written notice of any transfer of this Warrant permitted
        hereunder, in the form of Exhibit B hereto, to the Company within three (3)
        business days after such Warrant is made in the Company's warrant register,
        the
        Company may treat the registered holder of this Warrant as the absolute owner
        hereof for all purposes.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      Each
        certificate or other instrument for any shares of Common Stock issued upon
        the
        exercise of this Warrant shall bear the following legend:

       

      THESE
        SECURITIES MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT
        TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
        REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
        APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
        TO
        THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
        ACCEPTABLE TO THE COMPANY.

       

      5. Anti
        Dilution Adjustments.

       

      (a) If,
        at
        any time or from time to time after the date of this Warrant, the Company
        shall
        (i) pay a dividend or make a distribution on its capital stock in shares
        of
        Common Stock, (ii) subdivide its outstanding shares of Common Stock into
        a
        greater number of shares, (iii) combine its outstanding shares of Common
        Stock
        into a smaller number of shares or (iv) issue by reclassification of its
        Common
        Stock any shares of capital stock of the Company, the Per Share Warrant Price
        in
        effect immediately prior to such action shall be adjusted so that the
        Warrantholder of any Warrant thereafter exercised shall be entitled to receive
        the number of shares of Common Stock or other capital stock of the Company
        which
        he would have owned or been entitled to receive immediately following the
        happening of any of the events described above had such Warrant been exercised
        immediately prior thereto. An adjustment made pursuant to this Section 5
        shall
        become effective immediately after the record date in the case of a dividend
        or
        distribution and shall become effective immediately after the effective date
        in
        the case of a subdivision, combination or classification. If, as a result
        of an
        adjustment made pursuant to this Section 5, the Warrantholder of any Warrant
        thereafter surrendered for exercise shall become entitled to receive shares
        of
        two (2) or more classes of capital stock or shares of Common Stock and other
        capital stock of the Company, the Board of Directors (whose determination
        shall
        be conclusive and shall be described in a written notice to the Warrantholder
        of
        any Warrant promptly after such adjustment) shall determine the allocation
        of
        the adjusted Per Share Warrant Price between or among shares of such classes
        or
        capital stock or shares of Common Stock and other capital stock.

       

      (b) If,
        at
        any time or from time to time after the date of this Warrant, the Company
        shall
        consolidate or merge with or into another corporation (where the Company
        is not
        the surviving corporation or where there is a change in or distribution with
        respect to the Common Stock of the Company), or sell, transfer or otherwise
        dispose of its property, assets or business to another corporation and, pursuant
        to the terms of such reorganization, reclassification, merger, consolidation
        or
        disposition of assets, shares of common stock of the successor or acquiring
        corporation, or any cash, shares of stock or other securities or property
        of any
        nature whatsoever (excluding cash but including warrants or other subscription
        or purchase rights) in addition to or in lieu of common stock of the successor
        or acquiring corporation ("Other Property"), are to be received by or
        distributed to the holders of Common Stock of the Company, then the
        Warrantholder shall have the right thereafter to receive the number of shares
        of
        common stock of the successor or acquiring corporation, or of the Company
        if it
        is the surviving corporation, and Other Property receivable upon or as a
        result
        of such reorganization, reclassification, merger, consolidation or disposition
        of assets by a holder of Common Stock equal to the number of shares of Common
        Stock for which this Warrant is exercisable immediately prior to such
        event.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      6. Callable
        by the Company.

       

      This
        Warrant may be called at any time by the Company if (a) a registration statement
        under the Securities Act is effective during the entire Exercise Period (defined
        hereunder) which follows the Warrantholder's receipt of the Notice (defined
        hereunder) with respect to the Warrant Shares and (b) at least one of the
        following events occur (each, a “Call Event”) (i) the closing or last sale
        price, if the Common Stock is traded on an Exchange, or the average of the
        closing bid and ask prices, if the Company’s common stock is not traded on an
        Exchange, of the Common Stock is equal to or greater than the callable price
        of
        $13.50 for a period of twenty (20) consecutive trading days or (ii) (1)
        any
        company or individual acquires direct or indirect ownership or control of
        any
        voting shares of the Company if, after such acquisition, such company or
        individual will directly or indirectly own or control more than 50% of the
        voting shares of the Company; (2) any company or individual acquires a majority
        of the assets of the Company; or (3) any company merges or consolidates with
        the
        Company, which results in the members
        of the Company’s Board of Directors in office immediately prior to such
        transaction or event constituting less than a majority of such Board of
        Directors thereafter. At any time after a Call Event occurs, if the Company
        elects to exercise its rights hereunder, the Company will provide notice
        (“Notice”) to the Warrantholder. The
        Warrantholder must
        exercise, in whole or in part, the Warrant within thirty (30) days of
        receipt of the Notice (“Exercise Period”). If the Warrant is exercised, the
        Warrantholder must deliver to the Company at its principal offices a check
        or
        wire transfer payable to the order of the Company, in an amount equal to
        the
        product of the Per Share Warrant Price multiplied
        by
        the
        number of Warrant Shares exercised. If any Warrant Shares are not exercised
        on
        or before the expiration of the Exercise Period, then the Warrant will expire.
        

       

      7. Loss,
        etc. of Warrant.

       

      Upon
        receipt of evidence satisfactory to the Company of the loss, theft, destruction
        or mutilation of this Warrant, and of indemnity reasonably satisfactory to
        the
        Company, if lost, stolen or destroyed, and upon surrender and cancellation
        of
        this Warrant, if mutilated, and upon reimbursement of the Company’s reasonable
        incidental expenses, the Company shall execute and deliver to the Warrantholder
        a new Warrant of like date, tenor and denomination.

       

      8. Warrantholder
        Not Shareholder.

       

      This
        Warrant does not confer upon the Warrantholder any right to vote or to consent
        to or receive notice as a shareholder of the Company, or otherwise in respect
        of
        any matters whatsoever, or any other rights or liabilities as a
        shareholder.

       

      9. Communication.

       

      No
        notice
        or other communication under this Warrant shall be effective unless, such
        notice
        or other communication is in writing and is mailed by first-class mail, postage
        prepaid, addressed to:

       

      
        	 	
                (a)

              	
                the
                  Company at 1900 West Loop South, #1850, Houston, Texas 77027, or
                  such
                  other address as the Company has designated in writing to the
                  Warrantholder; or

              

      

       

      
        	 	
                (b)

              	
                the
                  Warrantholder at his address on the books and records of the Company,
                  or
                  as the Warrantholder has designated in writing to the
                  Company.

              

      

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      10. Headings.

       

      The
        headings of this Warrant have been inserted as a matter of convenience and
        shall
        not affect the construction hereof. 

       

      11. Amendment
        or Waiver.

       

      Any
        term
        of this Warrant may be amended or waived upon written consent of the Company
        and
        a majority of the Warrantholders.

       

      12. Governing
        Law; Jurisdiction; Venue.

       

      This
        Warrant shall be governed by and construed in accordance with the laws of
        the
        State of Delaware without giving effect to the principles of conflicts of
        law
        thereof. Any judicial proceeding involving any dispute, controversy or claim
        arising out of or relating to this Warrant may be brought in a court located
        in
        the State of Texas, and each of the Company and the Warrantholder (i)
        unconditionally accepts the nonexclusive jurisdiction of such courts and
        any
        related appellate court and irrevocably agrees to be bound by any judgment
        rendered thereby, (ii) irrevocably waives any objection it may now or hereafter
        have as to the venue of any such proceeding brought in such a court or that
        such
        a court is an inconvenient forum.

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS THEREOF, Interstate Data USA, Inc. has caused this Warrant to be
        signed
        by an executive officer as of this 28th day of September, 2007.

       

      
        	 	 	 
	 	   
                INTERSTATE DATA USA, INC.
	 
 	 
 	 
 
	 	  	 
	 	
                
                  

                

                Randy Carpenter

                President

              

      

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A

      

      ELECTION
        TO PURCHASE

      

      The
        undersigned, ____________________________________________, pursuant to the
        provisions of the foregoing Warrant, hereby irrevocably elects to exercise
        said
        Warant by the purchase of ______________ shares of the Common Stock of
        Interstate Data USA, Inc., covered by said Warrant, and makes payment therefore
        in full at the Per Share Warrant Price provided by said Warrant.

       

       

      
        	Dated:_______________________________ 	 	Signature:___________________________________
	 	 	 
	 	 	Address:____________________________________

      

                                                                                                                                                                                                                                                                

      
        
          
            
            

          

          
            -7-

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        B

      

      ASSIGNMENT

      

      FOR
        VALUE RECEIVED, _____________________________________
        hereby sells, assigns and transfer unto _____________ the foregoing Warrant
        and
        all rights evidenced thereby, and does irrevocably constitute and appoint
        ______________, attorney, to transfer said Warrant on the books of
        _______________________.

       

      
        	Dated:_______________________________ 	 	Signature:___________________________________
	 	 	 
	 	 	Address:____________________________________

      

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

      

      PARTIAL
        ASSIGNMENT

      

      FOR
        VALUE RECEIVED,
        _____________________________________________ hereby assigns and transfers
        unto
        _______________ the right to purchase __________ shares of the Common Stock
        of
        Interstate Data USA, Inc., by the foregoing Warrant, and a proportionate
        part of
        said Warrant and the rights evidenced hereby, and does irrevocably constitute
        and appoint ______________, attorney, to transfer that part of said Warrant
        on
        the books of Interstate Data USA, Inc.

      

      
        
          
            	Dated:_______________________________ 	 	Signature:___________________________________
	 	 	 
	 	 	Address:____________________________________

          

           

        

        
          
            
            

          

          
            -9-PLACEMENT
      AGENCY AGREEMENT

    

     February
      8, 2007

     

    Randy
      Carpenter, President

    Interstate
      Data USA, Inc.

    2150
      Carter Avenue

    Ashland,
      KY 41101

    

    Re:
      Private
      Placement of $2,100,000 Unit Offering

     

    Dear
      Randy:

     

    This
      Placement Agency Agreement (the “Agreement”) confirms the retention by
      Interstate Data USA, Inc., a Delaware corporation (the “Company”), of Newbridge
      Securities Corporation, a Virginia corporation (the
      “Placement Agent”), to act as the placement agent on a “best efforts” basis in
      connection with the private placement (the “Placement”) of Units (as defined
      below) of the Company on the terms set forth below. The Company acknowledges
      and
      agrees that the Agreement is not an agreement by the Placement Agent or any
      of
      its affiliates to underwrite or purchase any securities or otherwise provide
      any
      financing. Under no circumstances will the Placement Agent be obligated to
      purchase any Units (as defined below) for its own account, and in soliciting
      purchases of Units, the Placement Agent shall act solely as the Company’s agent
      and not as principal. Notwithstanding the foregoing, it is understood and agreed
      that the Placement Agent (or its affiliates) may, solely at its discretion
      and
      without any obligation to do so, purchase Units as principal. 

     

    1. PLACEMENT

     

    (a) The
      securities of the Company which are the subject of the Placement shall consist
      of a
      maximum
      of Two Million One Hundred Thousand Dollars ($2,100,000) (the “Maximum
      Amount”)
      of
units
      (the “Units”),
      at a
      price per Unit of Three Dollars ($3.00) (the “Unit
      Price”),
      with
      each Unit consisting of: 

     

    (i) One
      (1)
      share (collectively, the “Shares”)
      of the
      common stock of the Company, par value $0.001 per share (the “Common
      Stock”);
      and

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (ii) One
      (1)
      callable warrant (collectively, the “Warrants”)
      to
      purchase, at
      any
      time prior to the third (3rd) anniversary following the date of issuance of
      the
      Warrant, one (1) share of Common Stock at a price equal to Four Dollars and
      Fifty Cents ($4.50) per share of Common Stock (the “Warrant
      Exercise Price”).
      The
      shares of Common Stock underlying the Warrants are referred to herein as the
      “Warrant
      Shares.”
The
      Units, the Shares, the shares of Common Stock generally, the Warrants and the
      Warrant Shares are sometimes referred to collectively herein as the
“Securities.”
The
      Warrants may be called at any time by the Company if at least one of the
      following events occur (each, a “Call
      Event”)
      (i)
      the closing or last sale price, if the Common Stock is traded on an Exchange
      (as
      defined herein), or the average of the closing bid and ask prices, if the
      Company’s common stock is not traded on an Exchange, of the Common Stock is
      equal to or greater than the callable price of $13.50 for a period of twenty
      (20) consecutive trading days or (ii) (1)
      any
      company or individual acquires direct or indirect ownership or control of any
      voting shares of the Company if, after such acquisition, such company or
      individual will directly or indirectly own or control more than 50% of the
      voting shares of the Company; (2) any company or individual acquires a majority
      of the assets of the Company; or (3) any company merges or consolidates with
      the
      Company, which results in the members
      of the Company’s Board of Directors in office immediately prior to such
      transaction or event constituting less than a majority of such Board of
      Directors thereafter. At any time after a Call Event occurs, if the Company
      elects to exercise its rights hereunder, the Company will provide notice
      (“Notice”)
      to the
      holders of the Warrants. Each
      holder
      of Warrants
      must
      exercise, in whole or in part, the holder’s Warrants within thirty
      (30) days of receipt of the Notice (“Exercise
      Period”).
      If
      the Warrants are exercised, the holder must deliver to the Company at its
      principal offices a check or wire transfer payable to the order of the Company,
      in an amount equal to the product of the Warrant Exercise Price multiplied
      by
      the
      number of Warrants held (“Aggregate
      Warrant Exercise Price”).
      If
      the Warrants are not exercised on or before the expiration of the Exercise
      Period, then the Warrant will expire. Within five (5) days after the expiration
      of the Exercise Period, the Company shall remit to the Placement Agent a fee
      equal to eight percent (8%) multiplied
      by
      the
      Aggregate Warrant Exercise Price paid to the Company by each Warrant holder.
      "Exchange" shall mean any organization, association, or group of persons,
      whether incorporated or unincorporated, which constitutes, maintains, or
      provides a market place or facilities for bringing together purchasers and
      sellers of securities or for otherwise performing with respect to securities
      the
      functions commonly performed by a stock exchange as that term is generally
      understood, and includes the market place and the market facilities maintained
      by such exchange.

     

    (b) The
      Placement Agent accepts its appointment as exclusive placement agent and shall
      use its best efforts to sell the Units, except as otherwise provided in Section
      3(a) hereof. The Initial Closing is expected to occur on or before February
      28,
      2007, provided that, a minimum of $500,000 of Units has been sold, otherwise
      the
      Initial Closing shall occur within fifteen (15) calendar days after a minimum
      of
      $500,000 of Units has been sold (the “Initial
      Closing Date”),
      and
      there shall be subsequent closings of the Placement as contemplated hereby
      (each, a “Subsequent
      Closing”
and
      together with the Initial Closing, each, a “Closing”
and
      collectively, the “Closings”)
      each
      of which shall occur within fifteen (15) calendar days after an incremental
      $500,000 of Units has been sold, until the date on which the Maximum Amount
      is
      subscribed for by investors in the Placement (the “Investors”)
      and
      accepted by the Company (the “Final
      Closing Date”).
      Unless terminated earlier, the offering period for the Placement (the
“Offering
      Period”)
      will
      expire on the earlier to occur of: (i) March 31, 2007 (the “Termination
      Date”),
      (ii)
      the date on which the Maximum Amount is subscribed for and accepted by the
      Company or (iii) the termination of the Placement or this Agreement. Upon the
      written consent of the Placement Agent and the Company, the Termination Date
      shall be automatically extended on a monthly basis without notice to Investors
      unless otherwise terminated in writing by either party pursuant to Section
      5
      herein. 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c) The
      Placement will be made pursuant to the Memorandum (as defined in Section 2
      below). The Securities will not be registered under the Securities Act of 1933,
      as amended, or any applicable successor statute (the “Securities Act”),
      but
      will be issued in reliance on the private offering exemption available under
      Section 4(2) of the Securities Act and the Rules and Regulations (as defined
      below) promulgated thereunder, including Regulation D (“Regulation
      D”).
      The
      Placement Agent understands that all subscriptions for Units are subject to
      acceptance by the Company. The Company and the Placement Agent reserve the
      right
      in their reasonable discretion to accept or reject any or all subscriptions
      for
      Units in whole or in part, regardless whether any funds have been deposited
      into
      an escrow account. Any subscription monies received by the Placement Agent
      from
      Investors will be handled in accordance with Rule 15c2-4 under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”),
      whether or not the Placement Agent is subject to the Exchange Act, and as
      otherwise may be prescribed by the terms of the Memorandum. As used herein,
      the
      term “Rules
      and Regulations”
means
      the applicable rules and regulations promulgated under the Securities Act and
      the Exchange Act.

     

    (d) All
      subscription funds received shall be held by U.S. Bank N.A. (the “Escrow
      Agent”).
      The
      Placement Agent shall not have any independent obligation to verify the accuracy
      or completeness of any information contained in any Subscription Documents
      (as
      defined in Section 2 below) or the authenticity, sufficiency or validity of
      any
      check delivered by any prospective Investor in payment for the Units, nor shall
      the Placement Agent incur any liability with respect to any such verification
      or
      failure to verify. All subscription checks and funds shall be promptly and
      directly delivered without offset or deduction to the Escrow Agent.

     

    2. OFFERING
      MEMORANDUM AND RELATED MATTERS

     

    (a) The
      Company has prepared or will prepare a Confidential Private Placement
      Memorandum, relating to the Company and the Placement (such memorandum, together
      with the exhibits and attachments thereto or available thereunder and any
      amendments or supplements thereto prepared and furnished by the Company, being
      referred to herein as the “Memorandum”),
      which
      Memorandum, among other things, describes the Placement and certain investment
      risks relating thereto.

     

    (b) The
      Company has been and will continue to be responsible for preparing and filing
      required documentation, if any, with the authorities in the United States or
      any
      state located therein (and subsequent to, if required by the laws of any such
      jurisdiction) in connection with the distribution of the Memorandum to
      prospective Investors (the parties acknowledging, however, that the Placement
      of
      the Units is intended and expected to be wholly or partially exempt from filing
      requirements in the United States by reason of an “accredited investor”
exemption).

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (c) The
      Placement Agent and its counsel and the Company and its counsel have or will
      jointly prepare a form of subscription agreement (the “Subscription
      Agreement”),
      a
      form of accredited investor questionnaire and an investment letter (collectively
      with the Subscription Agreement and any other stock purchase or other documents
      required in connection with the Placement, the “Subscription
      Documents”),
      which
      Subscription Documents shall contain such representations, warranties,
      conditions and covenants as are customary in private placements of corporate
      debt and equity securities with United States investors that qualify as
      accredited investors, as defined in Rule 501(a) of Regulation D under the
      Securities Act (“Accredited
      Investors”).
      The
      Placement Agent and its counsel have had or will have a sufficient opportunity,
      in their discretion, to review the final form of the Memorandum and Subscription
      Documents prior to the distribution thereof to prospective Investors, and the
      Memorandum and the Subscription Documents will be the only offering documents
      (other than cover letters which may be used by the Placement Agent, and any
      documents made available to Investors in accordance with the terms of the
      Memorandum) shown to prospective Investors. The Placement Agent shall advise
      the
      Company of those jurisdictions in which the Placement Agent is licensed as
      a
      broker-dealer and in which the Placement Agent desires to offer the Units and
      the Company and its counsel will thereafter advise the Placement Agent and
      its
      counsel in writing of those jurisdictions in which the Units may lawfully be
      offered and sold and the Placement Agent agrees that the Units will be offered
      or sold only in such jurisdictions and in the manner specified by the Company;
      provided,
      however,
      that
the
      Placement Agent shall not be responsible for independently verifying such
      written advice with respect to the jurisdictions in which the Units
      may be
      offered and sold and with respect to the manner in which the Units
      may be
      offered and sold in such jurisdictions.
      Notwithstanding the foregoing, the Placement Agent shall determine whether
      it is
      licensed to offer and sell the Units in each jurisdiction
      in which it intends to do so.

     

    (d) Units
      will be offered and sold in accordance with the requirements of Section 4(2)
      under the Securities Act and/or Regulation D only to Accredited Investors,
      purchasing for their own account for investment purposes only and not with
      a
      view to the distribution thereof. Furthermore, prospective Investors will have
      been provided the Memorandum and access to the management of the Company and
      afforded the opportunity to ask questions.

     

    (e) The
      Company recognizes, agrees and confirms that the Placement Agent (or any selling
      agent permitted to be utilized by the Placement Agreement under Section 3(a)
      hereof): (i) will use and rely exclusively on the information contained in
      the
      Memorandum and the Subscription Documents in performing the services
      contemplated by this Agreement without having independently verified the same;
      (ii) is authorized, as the Company’s exclusive placement agent in connection
      with the Placement, to transmit to any prospective Investor a copy or copies
      of
      the Memorandum, the Subsciption Documents and any other documentation supplied
      to the Placement Agent for transmission to any prospective Investor by or on
      behalf of the Company or by any of the Company’s officers, representatives or
      agents, in connection with the performance of the Placement Agent’s services
      hereunder or any transaction contemplated hereby; (iii) does not assume
      responsibility for the accuracy or completeness of any information contained
      in
      the Memorandum and the Subsciption Documents or any such other information;
      (iv)
      will not make an appraisal of the Company or any assets of the Company or the
      securities being offered by the Company in the Placement; and (v) retains the
      right to continue to perform due diligence of the Company during the course
      of
      the Company’s engagement of the Placement Agent.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3. PLACEMENT
      AGENT

     

    (a) The
      Company hereby engages the Placement Agent as its exclusive placement agent
      in
      the United States for the purpose of selling the Units for the account and
      risk
      of the Company, subject to termination as provided in this Agreement. This
      appointment shall be exclusive for a period of 180 days with respect to the
      Placement and otherwise as provided herein, and the Company shall not have
      the
      right to appoint additional sales agents in the United States without the
      Placement Agent’s express prior written consent. The Company hereby agrees that
      the Placement Agent shall have the right to utilize other selling
      broker-dealers, with the Company’s consent, which consent shall not be
      unreasonably withheld, in connection with the Placement of the Units on terms
      approved by the Placement Agent. Subject to the provisions of Section 5 hereof
      and to the performance by the Company of all of its obligations to be performed
      hereunder, the Placement Agent agrees to use its best efforts to assist in
      arranging for sales of Units. The Company recognizes that “best efforts” does
      not assure that the Placement will be consummated. It is understood and agreed
      that this Agreement does not create any partnership, joint venture or other
      similar relationship between or among the Placement Agent and the Company,
      and
      that the Placement Agent is acting only as a sales agent.

     

    (b) For
      the
      services of the Placement Agent hereunder, the Company will pay or cause to
      be
      paid to the Placement Agent at any Closing by wire transfer of immediately
      available funds to an account or accounts designated by the Placement Agent
      the
      following fees:

     

    (i) a
      managing placement agent cash fee equal to ten percent (10%) of the gross
      proceeds (prior to the payment of expenses) received by the Company in the
      Placement as a result of the Placement Agent’s sale of Units (to be paid
      simultaneously with each applicable Closing);

     

    (ii) a
      cash
      commission fee, equal to two percent (2%) of the gross proceeds (prior to the
      payment of any fees or expenses to any party) received by the Company in the
      Placement as a result of the Placement Agent’s sale of Units (to be paid
      simultaneously with each applicable Closing); and

     

    (iii) Three
      (3)
      year warrants (the “Placement
      Agent Warrants”)
      for
      the purchase of shares of Common Stock of the Company (the “Placement
      Agent Warrant
      Shares”)
      equal
      to fifteen percent (15%) of the Shares sold by the Company as a result of the
      Placement Agent’s introduction of Investors to the Company, which Placement
      Agent Warrants will have an exercise price of Four Dollars and Fifty Cents
      ($4.50). 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c) To
      the
      extent Units are sold as a result of the direct efforts of the Company, the
      Placement Agent shall receive 

     

    (i)
      a
      cash fee equal to two percent (2%) of the gross proceeds (prior to the payment
      of expenses) received by the Company as a result of the direct efforts of the
      Company; and

     

    (ii)
      three (3) year warrants (collectively with the warrants referenced in Section
      3(b)(iii), the “Placement
      Agent Warrants”)
      for
      the purchase of shares of Common Stock of the Company (collectively with the
      shares underlying the warrants referenced in Section 3(b)(iii), the
“Placement
      Agent Warrant
      Shares”)
      equal
      to fifteen percent (15%) of the Shares sold by the Company as a result of the
      direct efforts of the Company, which Placement Agent Warrants will have an
      exercise price of Four Dollars and Fifty Cents ($4.50). 

     

    (d) Notwithstanding
      any termination of this Agreement pursuant to the terms hereof or otherwise,
      if
      on or before the one (1) year anniversary of the Final Closing Date, the Company
      enters into a commitment or letter of intent relating to any offering of debt
      or
      equity securities of the Company or any other financing with any financing
      source and their affiliates to whom the Company was introduced by the Placement
      Agent, the Company shall pay to the Placement Agent, at the closing of any
      such
      offering or financing, the fees described in, and in accordance with the terms
      and provisions of, Section 3(b)(i), (ii) and (iii) above. The Placement Agent
      will provide to the Company a list of all financing sources so introduced by
      the
      Placement Agent to the Company.

     

    (e) In
      the
      event the Company terminates the Placement pursuant to Section 5 before the
      Initial Closing, then, provided that sufficient arrangements shall have been
      made by Placement Agent so that the Placement contemplated hereby is in a
      position to be consummated on reasonable terms, the Company shall pay to
      Placement Agent a “break-up” fee as compensation for services and as liquidated
      damages, in lieu of any and all other damages, and in addition to any advances
      paid pursuant to this Agreement, in the amount of twenty thousand dollars
      ($20,000.00).

     

    (f) In
      the
      event that the Company determines that it will undertake an initial public
      offering of its Common Stock (“Public Offering”) within three (3) years from the
      date of this Agreeement, the Company agrees and acknowledges that the Company
      will appoint the Placement Agent as the lead managing underwriter of the Public
      Offering. The Placement Agent, in its sole discretion, shall accept or decline
      such appointment within 30 days of its receipt of notice from the Company
      regarding the Company's intent to pursue the Public Offering. The Placement
      Agent’s declination of the appointment shall not prevent the Placement Agent
      from acting as a co-manager in a syndicate in the Public Offering. In the event
      that the Placement Agent accepts such appointment, a separate engagement letter,
      which will require the execution of an underwriting agreement, in a form
      acceptable to the Placement Agent and its counsel, shall be executed. The
      provisons of this Section 3(f) shall survive the termination (for any reason)
      or
      expiration of this Agreement. 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      
        4.
          PAYMENT
          BY COMPANY OF EXPENSES

      

    

     

    (a) The
      Company will pay for or promptly reimburse to the Placement Agent, as the case
      may be, and whether or not any Units are sold in connection with the Placement,
      all
      reasonable expenses of the Company and the Placement Agent relating to the
      Placement, including actual legal fees incurred by the Placement Agent plus
      out-of-pocket expenses incurred by counsel to the Placement Agent and all other
      reasonable out-of-pocket expenses of the Placement Agent relating to activities
      under this Agreement, including, without limitation: (i)
      the
      preparation, printing, reproduction, filing, distribution and mailing of the
      Memorandum and all other documents relating to the Placement, and any
      supplements or amendments thereto, including the fees and expenses of counsel
      to
      the Company, and the cost of all copies thereof; (ii) the public registration
      and listing of, or registration and qualification of the Units or the securing
      of an exemption therefrom under state of foreign “blue sky” or securities laws,
      including, without limitation, filing fees payable in the jurisdictions in
      which
      such registration or qualification or exemption therefrom is sought, the costs
      of preparing preliminary, supplemental and final “blue sky surveys” relating to
      the offer and sale of the Securities and the fees and disbursements of counsel
      to the Placement Agent in connection with such “blue sky” matters; (iii) the
      filing fees, if any, payable to the applicable securities regulatory
      authorities; (iv) all Escrow Agent fees; and (v) all
      road
      show expenses, travel, legal, and other related expenses. All
      expenses incurred by the Placement Agent shall be subject to prior approval
      by
      the Company, which approval shall not be unreasonably withheld or delayed,
      and
      shall be invoiced and due upon receipt. All unpaid expenses due the Placement
      Agent will be deducted from the proceeds of a Closing and are subject to
      applicable charges pursuant to Section 4(c). 

     

    (b) In
      addition to its obligations under Section 4(a) above, the Company agrees to
      pay
      the Placement Agent a non-accountable expense allowance, for which no accounting
      will be provided, equal to two percent (2%) of the gross proceeds raised in
      the
      Placement as a result of
      the
      Placement Agent’s introduction of Investors to the Company.
      Such
      allowance shall be paid to the Placement Agent by the Company concurrently
      with
      each Closing.

     

    
      
        5.
          TERMINATION
          OF PLACEMENT

      

    

     

    This
      Agreement may be terminated: (i) by the Placement Agent or the Company at any
      time upon thirty (30) days prior written notice or (ii) immediately by the
      Placement Agent upon giving written notice to the Company, but only in the
      event
      that if:

     

    (a) in
      the
      reasonable opinion of the Placement Agent, the Memorandum contains an untrue
      statement of a material fact or omits to state a material fact required to
      be
      stated therein or necessary in order to make the statements appearing therein
      not misleading in the light of the circumstances in which they were made, and
      the Company shall not have corrected such untrue statement or omission to the
      reasonable satisfaction of the Placement Agent and its counsel within ten (10)
      days after the Company receives notice of such untrue statement or omission,
      provided that notwithstanding such ten (10) day period, the Initial Closing
      or,
      as the case may be, any Subsequent Closing shall not occur hereunder until
      the
      Placement Agent shall notify the Company that it is satisfied, in its reasonable
      determination, that the Company has taken such steps (including circulating
      amended offering materials and afforded prospective Investors a reasonable
      opportunity to review such amendments) to allow the Closing to occur;
      or

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b) the
      Company shall be in material breach of any representation, warranty, agreement
      or covenant made by it in this Agreement, any Subscription Document or any
      other
      document relating to the Placement and, in the case of a covenant, the Company
      has not cured any such breach after the expiration of seven (7) days written
      notice by the Placement Agent; or

     

    (c) (i)
      any
      calamitous domestic or international event or act or occurrence has taken place
      and, in the Placement Agent’s reasonable opinion, has or will materially disrupt
      general securities markets in the United States in the immediate future; or
      (ii)
      if trading on the New York Stock Exchange, the American Stock Exchange, the
      NASDAQ Stock Market, or in the over-the-counter market shall have been suspended
      or minimum or maximum prices for trading shall have been fixed, or maximum
      ranges for prices for securities shall have been required on the
      over-the-counter market by the National Association of Securities Dealers,
      Inc.
      (“NASD”)
      or by
      order of the Securities and Exchange Commission (“SEC”)
      or any
      other government authority having jurisdiction; or (iii) if the United States
      shall have become involved in a war, major hostilities or the like; or (iv)
      if a
      banking moratorium has been declared by a New York State or federal authority;
      or (v) if the Company shall have sustained a material loss, whether or not
      insured, by reason of fire, flood, accident or other calamity; or (vii) if
      there
      shall have been such material adverse change in the conditions or prospects
      of
      the Company; or (viii) if there shall have been such material adverse general
      market conditions as in the Placement Agent’s reasonable judgment would make it
      inadvisable to proceed with the Placement or the sale or delivery of the Units.
      

     

    
      
        6.
          OFFERING
          PERIOD; CLOSINGS

      

    

     

    Subject
      to the terms and conditions set forth in Sections 5 and 10 hereof, the Units
      will be offered during the Offering Period as described in Section 1(b) hereof.
      Any Closing shall be undertaken in a manner agreed to by the Company and the
      Placement Agent. 

     

    
      
        7.
          REPRESENTATIONS,
          WARRANTIES AND COVENANTS OF THE COMPANY

      

    

     

    The
      Company represents and warrants to the Placement Agent, as of the date hereof,
      the Initial Closing Date and each Subsequent Closing Date, that:

     

    (a) The
      Company has been validly formed and is legally existing as a corporation in
      good
      standing under the laws of the State of Delaware, with full corporate power
      and
      authority to conduct its business as currently conducted, and is in good
      standing in each jurisdiction in which the conduct of its business or the nature
      of its properties requires such qualification or authorization, except where
      the
      failure to be so qualified or authorized and in good standing could not
      reasonably be expected to have a material adverse effect on the business and
      financial condition of the Company, taken as a whole (a “Material
      Adverse Effect”).
      As of
      the date hereof, the Company does not have, directly or indirectly, any
      subsidiaries.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
       

      (b) The
        Company holds no ownership or other interest, nominal or beneficial, direct
        or
        indirect, in any corporation, partnership, joint venture or other business
        entity, except that the Company has an agreement to purchase 15% of the
        membership interests of MobileGates, LLC.

    

     

    (c) The
      authorized capital stock of the Company consists of 100,000,000 shares of
      capital stock, of which 80,000,000 are classified as Common Stock, par value
      $0.001 per share and 20,000,000 are classified as Preferred Stock, no par value.
      As of the date hereof and as of the Initial Closing Date, there will be such
      number of outstanding shares of Common Stock and shares of Preferred Stock
      (and
      no other shares of capital stock of the Company are or will be issued and
      outstanding other than the Securities issued in the Placement) as set forth
      in
      the Memorandum, and all such shares of capital stock (including the Shares
      issued in the Placement) are, as the case may be, duly authorized, validly
      issued, fully paid and nonassessable and not subject to preemptive rights.
      As of
      the Initial Closing Date, the Shares, the Warrant Shares and the Placement
      Agent
      Warrant Shares have been duly reserved, and when issued in accordance with
      the
      terms of this Agreement, the Warrants and the Placement Agent Warrants, as
      applicable, will be validly issued, fully paid and nonassessable and not subject
      to preemptive or any other similar rights and no personal liability will attach
      to the ownership thereof. The outstanding options, warrants and other
      convertible securities of the Company are as set forth on Schedule "A" hereto
      and in the Memorandum. The Company is not a party to an agreement, instrument
      or
      understanding which calls for, and no securities of the Company contains
      provisions relating to, the
      resetting or repricing
      of any debt or equity security instrument of the Company. The issuance of the
      Securities or the consummation of the Placement will not trigger any resetting
      or repricing of any debt or equity security instrument of the Company.

     

    (d) Neither
      the Memorandum nor the Subscription Documents contain any untrue statement
      of a
      material fact, and the Memorandum will not omit to state any material fact
      necessary in order to make the statements made, in light of the circumstances
      under which they were made, not misleading, except that the Company shall have
      no liability for any information provided to the Company in writing by, and
      relating to, the Placement Agent, for use in and used in the Memorandum. It
      is
      understood that any summary in the Memorandum of a document which appears
      therein in full (either as signed or substantially in the form to be signed)
      does not constitute an untrue or misleading statement merely because it is
      a
      summary; provided,
      however,
      that
      any such summary may not contain any untrue statement of a material fact or
      omit
      to state any material fact necessary to make the statements made, in light
      of
      the circumstances under which they were made, not misleading. If, at any time
      before the Placement is completed or terminated or before all subscriptions
      are
      accepted by the Company, there should be any change which would cause the
      Memorandum or the Subscription Documents not to comply with this Section 7(d),
      the Company will promptly advise the Placement Agent thereof and prepare and
      furnish the Placement Agent with, for distribution to Investors, after prior
      review and approval by the Placement Agent and its counsel (such approval not
      to
      be unreasonably withheld), such copies of such supplements or amendments to
      the
      Memorandum and the Subscription Documents as will cause the Memorandum and
      the
      Subscription Documents, as so supplemented or amended, to comply with this
      Section 7(d), and will authorize the Placement Agent to make to Investors,
      if:
      (i) deemed necessary by counsel to the Placement Agent and approved by the
      Placement Agent, or (ii) if deemed necessary by counsel to the Company, an
      offer
      of rescission.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (e) The
      Company is not in: (i) violation of its certificate or articles of
      incorporation, by-laws or other organizational documents, (ii) except as
      disclosed in the Memorandum, default under, and no event has occurred which,
      with notice or lapse of time or both, would constitute a default under or result
      in the creation or imposition of any lien, charge, mortgage, pledge, security
      interest, claim, equity, trust or other encumbrance, preferential arrangement,
      defect or restriction of any kind whatsoever (each, a “Lien”)
      upon
      any of its property or assets pursuant to, any indenture, mortgage, deed of
      trust, loan agreement or other agreement or instrument to which it is a party
      or
      by which it is bound or to which any of its property or assets is subject or
      (iii) violation, to its Knowledge (as defined herein), in any respect of any
      law, rule, regulation, ordinance, directive, judgment, decree or order of any
      judicial, regulatory or other legal or governmental agency or body, foreign
      or
      domestic, except (in the case of clause (ii) above) for any Lien disclosed
      in
      the Memorandum and the exhibits thereto and except, in the cases of (ii) and
      (iii), where such defaults or violations do not, individually or in the
      aggregate, have a Material Adverse Effect. In this Agreement "Knowledge" shall
      mean the actual knowledge of any officer of the Company after due investigation
      made by that officer.

     

    (f) The
      execution, delivery and performance of this Agreement, the Memorandum, the
      Subscription Documents, the Warrants, the Placement Agent Warrants and all
      other
      documents to be entered into by the Company in connection with any transaction
      described in the Memorandum or in connection with the Placement, and the
      consummation of the transactions contemplated hereby and thereby, have been
      or
      will be prior to such execution, delivery, performance or consummation, as
      the
      case may be, duly and validly authorized by the Company and do not and will
      not:
      (i) constitute, or result in, a breach or violation of any of the terms,
      provisions or conditions of the Certificate of Incorporation or Bylaws of the
      Company, (ii) constitute, or result in, a material violation of any applicable
      statute, law, ordinance or regulation of any state, territory or other
      jurisdiction, or (iii) violate, constitute, or result in, a default under (or
      an
      event which with the passing of time or the giving of notice or both would
      constitute a default under) or breach of the terms, provisions or conditions
      of
      any material indenture, note, contract, commitment, instrument or document
      to
      which the Company is or will be a party or by which the Company, or any of
      its
      respective properties are bound, or any award, judgment, decree, rule or
      regulation of any court or governmental or regulatory agency or body having
      jurisdiction over the Company or its respective activities or properties except,
      in the cases of (ii) and (iii), where such defaults or violations do not,
      individually or in the aggregate, have a Material Adverse Effect. 

     

    (g) This
      Agreement, the Subscription Documents, the Warrants, the Placement Agent
      Warrants and all other documents to be entered into by the Company in connection
      with any transaction described in the Memorandum or in connection with the
      Placement have been duly authorized, executed and delivered by the Company
      and
      constitute the legal, valid and binding obligation of the Company, enforceable
      against the Company in accordance with their terms, except insofar as
      enforcement of the indemnification or contribution provisions hereof may be
      limited by applicable laws or principles of public policy and except further
      as
      to enforcement, to the availability of equitable remedies and limitations
      imposed by bankruptcy, insolvency, reorganization and other similar laws and
      related court decisions relating to or affecting creditors’ rights
      generally.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (h) The
      Company has never declared, paid or made any dividends or other distributions
      of
      any kind on or in respect of its capital stock.

     

    (i) Except
      as
      disclosed in the Memorandum, since December 31, 2006, there has been no material
      adverse change (or any development involving a prospective material adverse
      change), whether or not arising from transactions in the ordinary course of
      business, in or affecting: (i) the business, condition (financial or otherwise),
      results of operations, shareholders’ equity, properties or prospects of the
      Company, taken as a whole; (ii) the long-term debt or capital stock of the
      Company; or (iii) the Placement or consummation of any of the other transactions
      contemplated by this Agreement. Since the date of the latest balance sheet
      presented in or attached to the Memorandum, the Company has not incurred or
      undertaken any liabilities or obligations, whether direct or indirect,
      liquidated or contingent, matured or unmatured, or entered into any
      transactions, including any acquisition or disposition of any business or asset,
      which are material to the Company taken as a whole, except for liabilities,
      obligations and transactions which are disclosed in the Memorandum and the
      exhibits thereto.

     

    (j) The
      financial statements, including the notes thereto, and the supporting schedules
      included in the Memorandum present fairly, in all material respects and as
      of
      the dates indicated and for the periods specified the financial position and
      the
      cash flows and results of operations of the Company. Except as otherwise stated
      in the Memorandum, such financial statements have been prepared in conformity
      with United States generally accepted accounting principles applied on a
      consistent basis throughout the periods involved. The supporting schedules,
      if
      any, included in the Memorandum present fairly the information required to
      be
      stated therein. The other financial and statistical information included in
      the
      Memorandum presents fairly the information included therein in all material
      respects.

     

    (k) The
      accounting firm or firms which audited the financial statements of the Company
      as of, and for the periods ended, December 31, 2005 and 2004, and which is
      expected to audit the Company’s financial statements as of, and for the period
      ended December 31, 2006, are independent certified public accountants as
      required by the Securities Act, the Exchange Act and the Rules and
      Regulations.

     

    (l) The
      statistical, industry-related and market-related data included in the Memorandum
      are based on or derived from sources which the Company reasonably and in good
      faith believes are reliable and accurate, and such data agree with the sources
      from which they are derived.

     

    (m) No
      consent, approval, authorization or order of any court or governmental or
      regulatory agency or body or any individual or entity is required on the part
      of
      the Company for the lawful consummation of the transactions contemplated hereby
      and thereby, except for such consents and approvals with respect to the offer
      and sale of the Units in certain jurisdictions which are identified to the
      Company by the Placement Agent or its counsel.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (n) The
      Company has all necessary consents, approvals, authorizations, orders,
      registrations, qualifications, licenses, filings and permits of, with and from
      all applicable judicial, regulatory and other legal or governmental agencies
      and
      bodies and all third parties, foreign and domestic (collectively, the
“Consents”),
      to
      own, lease and operate their respective properties and conduct their respective
      businesses as are now being conducted and as disclosed in the Memorandum, except
      where the failure to have any such Consent would not have a Material Adverse
      Effect. Each such Consent is valid and in full force and effect, and the Company
      has not received written notice of any investigation or proceedings which
      results in or, if decided adversely to the Company, could reasonably be expected
      to result in, the revocation of, or imposition of a materially burdensome
      restriction on, any Consent. 

     

    (o) To
      its
      Knowledge, the Company is in compliance with all applicable laws, rules,
      regulations, ordinances, directives, judgments, decrees and orders, foreign
      and
      domestic, except where the failure to so comply does or would not have a
      Material Adverse Effect.

     

    (p) Neither
      the Company nor any of its directors, officers, employees, agents or
      representatives (“Company
      Representatives”)
      has
      taken or will take any action which has caused or may cause the Placement not
      to
      qualify for exemption from the registration requirements of the Securities
      Act
      or of United States federal, state or other securities or other laws. In
      connection with the Placement, neither the Company nor the Company
      Representatives shall offer or cause to be offered the Units by any form of
      general solicitation or general advertising as defined in Rule 502(c) of
      Regulation D. The Company and the Company Representatives have not taken and
      shall not take any action (except for actions contemplated by the Memorandum)
      that would cause the Placement to be integrated with other transactions under
      Rule 502(a) of Regulation D. Neither the Company nor, to the Company’s
      Knowledge, any of its Affiliates or Company Representatives has, prior to the
      date hereof, made any offer or sale of any securities which could be
“integrated” for purposes of the Securities Act or the Rules and Regulations
      with the offer and sale of the Securities pursuant to the
      Memorandum.

     

    (q) Except
      as
      disclosed in the Memorandum, and except for such matters that, individually
      or
      in the aggregate, would not have a Material Adverse Effect on the business,
      operations or financial results of the
      Company (either individually or in the aggregate), including a potential dispute
      relating to a Consulting Contract between the Company and Service Merchants
      Corp., dated April 3, 2006, there are no claims, actions, suits, investigations
      or proceedings before or by any arbitrator, court, governmental authority or
      instrumentality pending or threatened against or affecting the Company or
      involving the properties of the Company which might affect the business,
      properties or financial condition of the Company or which might affect the
      transactions or other acts contemplated by this Agreement or the validity or
      enforceability of this Agreement;

     

    (r) The
      Company will not offer the Units for sale hereunder on the basis of any
      communications or documents relating to the Placement Agent or the Units except
      the Memorandum and the exhibits thereto and documents described or referred
      to
      therein, including the Subscription Documents. 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (s) To
      its
      Knowledge, the Company has neither violated nor is currently in violation of
      any
      provisions of: (a) any code, law (including common law), ordinance, regulation,
      reporting or licensing requirement, rule, or statute promulgated by any federal,
      state, county, local or other governmental or regulatory agencies, authorities
      (including self- regulatory authorities), instrumentalities, commissions, boards
      or bodies relating in any way to protection or regulation of public health,
      human health, or the environment, including, but not limited to, ambient air,
      indoor air, surface water, ground water, other waters, land surface, subsurface
      strata, or occupational safety and health, the emission, discharge, disposal,
      spill, release, or threatened release of any hazardous material, or otherwise
      relating to the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport, or handling of any hazardous material; (b) Employee
      Retirement Income Security Act of 1974, as amended, including the regulations
      and published interpretations thereunder (“ERISA”),
      (c)
      the Bank Secrecy Act, as amended, (d) the Money Laundering Control Act of 1986,
      as amended, (e) the Foreign Corrupt Practices Act, or (f) the Uniting and
      Strengthening of America by Providing Appropriate Tools Required to Intercept
      and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and the rules and
      regulations promulgated under any such law, or any successor law, except for
      such violations which, singly or in the aggregate, would not have a Material
      Adverse Effect.

     

    (t) So
      long
      as the Common Stock and the Warrants (including the Common Stock receivable
      upon
      the exercise thereof) are “restricted securities” within the meaning of Rule
      144(a)(3) under the Securities Act, the Company, during any period in which
      it
      is not subject to and in compliance with Section 13 or 15(d) of the Exchange
      Act, or is not exempt from such reporting requirements pursuant to and in
      compliance with Rule 12g3-2b under the Exchange Act, provide to each holder
      of
      Common Stock and to each prospective purchaser (as designated by such holder)
      of
      Common Stock upon the request of such holder or prospective holder, any
      information required to be provided by Rule 144A(d)(4) under the Securities
      Act.

     

    (u) The
      Company is not and, at all times up to and including consummation of the
      transactions contemplated by this Agreement, and after giving effect to
      application of the net proceeds of the Placement, will not be, subject to
      registration as an “investment company” under the Investment Company Act of
      1940, as amended (the “1940
      Act”),
      and
      is not and will not be an entity “controlled” by an “investment company” within
      the meaning of the 1940 Act. The Company will: (i) utilize the proceeds of
      the
      Placement in accordance with the “Use of Proceeds” section of the Memorandum and
      (ii) initially utilize the proceeds of the Placement and all other funds of
      the
      Company in such a manner so as to cause the Company not to be subject to the
      1940 Act, and will thereafter use its best efforts to avoid the Company’s
      becoming subject to the 1940 Act.

     

    (v) Except
      as
      disclosed in the Memorandum, there are no contracts, agreements or
      understandings between the Company and any person that would give rise to a
      valid claim against the Company or the Placement Agent for a brokerage
      commission, finder’s fee or other like payment in connection with the
      transactions contemplated by this Agreement or, to the Company’s Knowledge, any
      arrangements, agreements, understandings, payments or issuance with respect
      to
      the Company or any of its officers, directors, shareholders, partners,
      employees, or affiliates that may affect the Placement Agent’s
      compensation.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (w) No
      relationship, direct or indirect, exists between or among any of the Company
      or
      any Affiliate of the Company, on the one hand, and any director, officer,
      stockholder, customer or supplier of the Company or any Affiliate of the
      Company, on the other hand, which is required by the Securities Act, the
      Exchange Act or the Rules and Regulations to be described in the Memorandum
      which is not so described. There are no outstanding loans (except for mortgage
      loans made in the ordinary course of business), advances (except normal advances
      for business expenses in the ordinary course of business) or guarantees of
      indebtedness by the Company to or for the benefit of any of the officers or
      directors of the Company or any of their respective family members, except
      as
      disclosed in the Memorandum.

     

    (x) The
      Company owns or leases all such properties as are necessary to the conduct
      of
      its business as presently operated. The Company has good and marketable title
      in
      fee simple to all real property and good and marketable title to all personal
      property owned by it, in each case free and clear of all Liens except such
      as
      are described in the Memorandum or such as do not (individually or in the
      aggregate) materially interfere with the use made or proposed to be made of
      such
      property by the Company. Any real property and buildings held under lease or
      sublease by the Company are held by it under valid and enforceable leases with
      such exceptions as are not material to, and do not interfere with, the use
      made
      and proposed to be made of such property and buildings by the Company. The
      Company has not received any written notice (or, to the Company’s Knowledge, any
      other notice) of any claim adverse to its ownership of any real or personal
      property or of any claim against the continued possession of any real property,
      whether owned or held under lease or sublease by the Company. 

     

    (y) The
      Company: (i) owns or possesses all rights to use, option and/or license, as
      the
      case may be, all patents, patent applications, provisional patents, trademarks,
      service marks, trade names, trademark registrations, service mark registrations,
      copyrights, licenses, formulae, mask works, customer lists, internet domain
      names, know-how and other intellectual property (including trade secrets and
      other unpatented and/or unpatentable proprietary or confidential information,
      systems or procedures, “Intellectual
      Property”)
      necessary for the conduct of their respective businesses as being conducted
      and
      as described in the Memorandum and (ii) does not believe that the conduct of
      their respective businesses does or will conflict with, and have not received
      any notice of any claim of conflict with, any such right of others, which
      conflict would have a Material Adverse Effect. To the best of the Company’s
      Knowledge, all Intellectual Property developed by and belonging to the Company
      (including, without limitation, that which is developed by consultants to the
      Company) which has not been patented has been kept confidential so as, among
      other things, all such information may be deemed proprietary to the Company.
      To
      the Company’s Knowledge, there is no infringement by third parties of any
      Intellectual Property. There are no pending or, to the Company’s Knowledge,
      threatened actions, suits, proceedings or claims by others challenging the
      Company’s rights in or to any Intellectual Property, and to the Company's
      Knowledge there are no facts which would form a reasonable basis for any such
      claim. There is no pending or, to the Company’s Knowledge, threatened action,
      suit, proceeding or claim by others that the Company infringes or otherwise
      violates any Intellectual Property rights of others, in each case which would
      be
      reasonably likely to have a Material Adverse Effect, and the Company is unaware
      of any other fact which would form a reasonable basis for any such claim.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (z) The
      Company maintains insurance in such amounts and covering such risks as are
      customary for similarly-sized private companies engaged in similar businesses
      in
      similar industries, all of which insurance is in full force and effect. There
      are no material claims by the Company under any such policy or instrument as
      to
      which any insurance company is denying liability or defending under a
      reservation of rights clause. The Company reasonably believes that it will
      be
      able to renew its existing insurance as and when such coverage expires or will
      be able to obtain replacement insurance adequate for the conduct of its
      business. 

     

    (aa) The
      Company has prepared and timely filed all federal, state, foreign and other
      tax
      returns that are required to be filed by it and has paid or made provision
      for
      the payment of, except such as may be contested in good faith, all taxes,
      assessments, governmental or other similar charges, including without
      limitation, all sales and use taxes and all taxes which the Company is obligated
      to withhold from amounts owing to employees, creditors and third parties, with
      respect to the periods covered by such tax returns (whether or not such amounts
      are shown as due on any tax return). No deficiency assessment with respect
      to a
      proposed adjustment of the Company’s federal, state, local or foreign taxes is
      pending or, to the Company’s knowledge, threatened which, if the subject of an
      unfavorable decision, ruling or finding, would have a Material Adverse Effect.
      The accruals and reserves on the books and records of the Company in respect
      of
      tax liabilities for any taxable period not finally determined are adequate
      in
      all material respects to meet any assessments and related liabilities for any
      such period and, since the date of the Company’s most recent audited financial
      statements, the Company has not incurred any liability for taxes other than
      in
      the ordinary course of its business. There is no tax Lien, whether imposed
      by
      any federal, state, foreign or other taxing authority, outstanding against
      the
      assets, properties or business of the Company.

     

    (bb) No
      labor
      disturbance by the employees of the Company currently exists or, to the
      Company’s Knowledge, is likely to occur. 

     

    (cc) No
      “prohibited transaction” (as defined in either Section 406 of the ERISA or
      Section 4975 of the Internal Revenue Code of 1986, as amended from time to
      time
      (the “Code”)),
      “accumulated funding deficiency” (as defined in Section 302 of ERISA) or other
      event of the kind described in Section 4043(b) of ERISA (other than events
      with
      respect to which the 30-day notice requirement under Section 4043 of ERISA
      has
      been waived) has occurred with respect to any employee benefit plan for which
      the Company would have any liability; each employee benefit plan of the Company
      is in compliance in all material respects with applicable law, including
      (without limitation) ERISA and the Code; the Company has not incurred and does
      not expect to incur liability under Title IV of ERISA with respect to the
      termination of, or withdrawal from any “pension plan”; and each employee benefit
      plan of the Company that is intended to be qualified under Section 401(a) of
      the
      Code is so qualified and nothing has occurred, whether by action or by failure
      to act, which could cause the loss of such qualification. 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (dd) In
      addition to the foregoing, to the extent not set forth herein, the Placement
      Agent may rely on the representations and warranties made by the Company in
      the
      Subscription Agreement provided by the Company and used in connection with
      the
      Placement.

     

    
      
        8.
          REPRESENTATIONS,
          WARRANTIES AND COVENANTS OF THE PLACEMENT
          AGENT

      

    

     

    The
      Placement Agent hereby represents and warrants to, and covenants with, the
      Company that:

     

    (a) This
      Agreement has been duly authorized, executed and delivered by the Placement
      Agent and constitutes the legal, valid and binding obligation of the Placement
      Agent, enforceable against it in accordance with its terms, except insofar
      as
      enforcement of the indemnification or contribution provisions hereof may be
      limited by applicable laws or principles of public policy and subject, as to
      enforcement, to the availability of equitable remedies and limitations imposed
      by bankruptcy, insolvency, reorganization and other similar laws and related
      court decisions relating to or affecting creditors’ rights
      generally.

     

    (b) The
      Placement Agent will cooperate with the Company to ensure that the offering
      and
      sale of the Units will comply with the requirements of the Securities Act,
      including, without limitation, the general conditions contained in Regulation
      D
      and the federal securities laws, and will follow the reasonable advice of the
      Company with respect to the manner in which to offer and sell the Units so
      as to
      ensure that the offering and sale thereof will comply with the securities laws
      of any jurisdiction in which Securities are offered by the Placement Agent,
      and
      the Placement Agent will not make an offer of Securities in any jurisdiction
      in
      which the Company advises it in writing that such offer would be unlawful for
      the Placement Agent to offer or sell securities. 

     

    (c) The
      Placement Agent is: (i) a registered broker-dealer under the Exchange Act;
      (ii)
      a member in good standing of the NASD; and (iii) registered as a broker-dealer
      in each jurisdiction in which it is required to be registered as such in order
      to offer and sell the Units in such jurisdiction. The compensation to the
      Placement Agent provided for in this Agreement complies with the rules of the
      NASD in all respects.

     

    (d) The
      Placement Agent has not and will not make an offer of Units (or of any
      securities, the offering of which may be integrated with the Placement) on
      the
      basis of any communications or documents relating to the Company or the Units
      except the Memorandum and the exhibits thereto and documents described or
      referred to therein (including the Subscription Documents), and the cover
      letters referred to in Section 2 hereof. Without limiting the generality of
      the
      foregoing, the Placement Agent has not and will not make any representation
      as
      to any rate of return on investment that an offeree may obtain from the
      ownership of Common Stock or Warrants other than as set forth in the Memorandum.
      The Placement Agent will deliver a copy of the Memorandum to each prospective
      Investor solicited by it prior to such offeree’s execution of the Subscription
      Documents or, in the case of amendments or supplements to the Memorandum (other
      than those amendments and supplements approved in writing by the Company but
      designated in writing as not subject to this requirement), prior to such
      offeree’s execution of an acknowledgment of receipt of such amendment or
      supplement and reconfirmation of intent to subscribe.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (e) The
      Placement Agent will obtain from each investor purchasing Securities in the
      Placement duly executed Subscription Documents, in the forms provided to the
      Placement Agent by the Company with the approval of the Placement Agent and
      its
      counsel.

     

    (f) The
      Placement Agent will use its best efforts to promptly notify the Company of
      the
      jurisdictions in which the Securities will be offered pursuant to this Agreement
      prior to such offers and will periodically notify the Company of the status
      of
      the offering conducted pursuant to this Agreement. Such notices will be provided
      to the Company so as to enable the Company to timely comply with its filing
      obligations under applicable federal and state laws, including blue sky laws
      which the Placement Agency acknowledges may require filings prior to any offers
      or sales of the Securities. 

     

    (g) The
      Placement Agent has delivered or caused to be delivered (or will so deliver
      prior to the applicable closing date) to each prospective Investor the
      Memorandum.

     

    (h) The
      Placement Agent will not deliver the Memorandum or Subscription Documents to
      any
      person it does not reasonably believe to be an Accredited Investor or to any
      person in a state where it does not reasonably believe that the Placement will
      qualify under applicable state "Blue Sky" laws.

     

    (i) The
      Placement Agent shall use all commercially reasonable efforts to determine
      whether any prospective purchaser is an Accredited Investor and that any
      information furnished by a prospective purchaser is accurate.

     

    
      
        9.
          ADDITIONAL
          COVENANTS AND AGREEMENTS OF THE COMPANY

      

    

     

    The
      Company covenants to and agrees with the Placement Agent that it
      shall:

     

    (a) Notify
      the Placement Agent as soon as practicable, and confirm such notice promptly
      in
      writing: (i) when any event shall have occurred during the period commencing
      on
      the date hereof and ending on the later of the Final Closing Date as a result
      of
      which the Memorandum would include any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein not misleading, and (ii) of the receipt of any
      notification with respect to the modification, rescission, withdrawal or
      suspension of the qualification or registration of the Securities or of an
      exemption from such registration or qualification in any jurisdiction. The
      Company will use its reasonable best efforts to prevent the issuance of any
      such
      modification, rescission, withdrawal or suspension and, if any such
      modification, rescission, withdrawal or suspension is issued, to obtain the
      lifting thereof as promptly as possible.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (b) Not
      supplement or amend the Memorandum unless the Placement Agent and its counsel
      shall have approved of such supplement or amendment in writing, such approval
      not to be unreasonably withheld, delayed or conditioned. If, at any time during
      the period commencing on the date hereof and ending on the Final Closing Date,
      any event shall have occurred as a result of which the Memorandum contains
      any
      untrue statement of a material fact or omits to state any material fact required
      to be stated therein or necessary to make the statements therein not misleading,
      or if, in the opinion of counsel to the Company or counsel to the Placement
      Agent, it is necessary at any time to supplement or amend the Memorandum to
      comply with the Securities Act, Regulation D or any applicable securities or
      “blue sky” laws, the Company will promptly prepare an appropriate supplement or
      amendment (in form and substance reasonably satisfactory to the Placement Agent
      and its counsel) which will correct such statement or omission or which will
      effect such compliance.

     

    (c) Deliver
      without charge to the Placement Agent such number of copies of the Memorandum
      and any supplement or amendment thereto as may reasonably be requested by the
      Placement Agent.

     

    (d) Not,
      directly or indirectly, in connection with the Placement or as otherwise agreed
      to in this Agreement, solicit any offer to buy from, or offer to sell to, any
      person or entity any Securities or other securities of the Company except
      through the Placement Agent. 

     

    (e) Not
      solicit any offer to buy or offer to sell Securities by any form of general
      solicitation or advertising, including, without limitation, any advertisement,
      article, notice or other communication published in any newspaper, magazine
      or
      similar medium or broadcast over the Internet, television or radio or at any
      seminar or meeting whose attendees have been invited by any general solicitation
      or advertising.

     

    (f) At
      all
      times during the period commencing on the date hereof and ending on the date
      of
      the Final Closing Date, provide to each prospective Investor or his purchaser
      representative, if any, on reasonable request, such information (in addition
      to
      that contained in the Memorandum) concerning the Placement, the Company, the
      Securities and any other relevant matters as it possesses or can acquire without
      unreasonable effort or expense and extend to each prospective Investor or his
      purchaser representative, if any, the opportunity to ask questions of, and
      receive answers from the Company concerning the terms and conditions of the
      Placement and the business of the Company and to obtain any other additional
      information, to the extent it possesses the same or can acquire it without
      unreasonable effort or expense, as such prospective Investor or purchaser
      representative may consider necessary in making an informed investment decision
      or in order to verify the accuracy of the information furnished to such
      prospective Investor or purchaser representative, as the case may
      be.

     

    (g) Notify
      the Placement Agent promptly of the acceptance or rejection of any
      subscription.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (h) File
      five
      (5) copies of a Notice of Sales of Securities on Form D with the SEC no later
      than 15 days after the first sale of the Securities, if required by law. The
      Company shall file promptly such amendments to such Notices on Form D as shall
      become necessary and shall also comply with any filing requirement imposed
      by
      the laws of any state, province or jurisdiction in which offers and sales are
      made, including all appropriate “blue sky” filings. The Company shall furnish
      the Placement Agent with copies of all filings made hereunder.

     

    (i) Place
      the
      following legend on all certificates representing the Shares and the
      Warrants:

     

    “THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
      NOR
      ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
      DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
      ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
      LAWS
      WHICH, IN THE OPINION OF COUNSEL FOR THE COMPANY, IS AVAILABLE.”

     

    (j) Not,
      directly or indirectly, engage in any act or activity which may jeopardize
      the
      status of the offering and sale of the Units as exempt transactions under the
      Securities Act or under the securities or “blue sky” laws of any jurisdiction in
      which the Placement may be made. 

     

    (k) Apply
      the
      net proceeds from the sale of the Units for the purposes set forth under the
      caption “Use of Proceeds” in the Memorandum in the manner indicated thereunder.

     

    (l) Not,
      during the period commencing on the date hereof and ending on the Final Closing
      Date, issue any press release or other communication or hold any press
      conference with respect to the Company, its financial condition, results of
      operations, business properties, assets, liabilities or future prospects of
      the
      Placement, without the prior written consent of the Placement Agent, which
      consent will not be unreasonably withheld or delayed.

     

    (m) Not,
      prior to the completion of the Placement, bid for, purchase, attempt to induce
      others to purchase, or sell, directly or indirectly, any shares of Common Stock
      or any other securities in violation of the provisions of Regulation M under
      the
      Exchange Act.

     

    (n) In
      addition to the foregoing, to the extent not set forth herein, the Placement
      Agent may rely on the covenants made by the Company in the Subscription
      Documents used in connection with the Placement.

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      
        10.
          CONDITIONS
          OF THE PLACEMENT AGENT’S OBLIGATIONS

      

    

     

    The
      obligations of the Placement Agent pursuant to this Agreement shall be subject,
      in its discretion, to the continuing accuracy of the representations and
      warranties of the Company contained herein and in each certificate and document
      contemplated under this Agreement to be delivered to the Placement Agent or
      otherwise at any closing (including, without limitation, all Subscription
      Documents and the Memorandum), as of the date hereof and as of the Initial
      Closing Date or the date of any closing subsequent to the Initial Closing Date,
      to the performance by the Company of its obligations hereunder, and to the
      following conditions:

     

    (a) At
      the
      Initial Closing and each Subsequent Closing, the Placement Agent shall have
      received certificates for the Shares sold to the Investors in the Placement,
      duly executed and made out in the name of such Investors for the amount of
      Shares purchased.

     

    (b) At
      the
      Initial Closing and each Subsequent Closing, the Placement Agent shall have
      received warrant certificates for the Warrants sold to the Investors in the
      Placement, duly executed and made out in the name of such Investors for the
      amount of Warrant Shares which may be received upon the exercise
      thereof.

     

    (c) At
      the
      Initial Closing and each Subsequent Closing, the Placement Agent shall have
      received warrant certificates for the Placement Agent Warrants, duly executed
      and made out in the name of the Placement Agent for the amount of Placement
      Agent Warrant Shares which may be received upon the exercise
      thereof

     

    (d) At
      the
      Initial Closing and each Subsequent Closing, the Placement Agent shall have
      received the applicable fees payable to the Placement Agent as described in
      Section 3 hereof.

     

    (e) At
      the
      Initial Closing and each Subsequent Closing, the Placement Agent shall have
      received the favorable opinion of Blank Rome, LLP, as counsel for the Company,
      in the form and substance customary for transactions such as the placement
      and
      reasonably satisfactory to the Placement Agent. 

     

    (f) At
      the
      Initial Closing and each Subsequent Closing, the Placement Agent shall have
      received the favorable opinion of intellectual property
      counsel for the Company with respect to the intellectual
      property
      rights
      of
      the
      Company and other related matters as the Placement Agent may
      require.

     

    (g) At
      each
      Closing, the Placement Agent shall have received a certificate of the Chief
      Executive Officer of the Company, dated, as applicable, as of the date of such
      Closing: (i) to the effect that, as of the date of this Agreement and as of
      the
      applicable date, the representations and warranties of the Company contained
      herein were and are accurate, and that, as of the applicable date, the
      obligations to be performed by the Company hereunder on or prior thereto have
      been fully performed, and (ii) with respect to the incumbency of the officers
      of
      the Company executing the documentation delivered at such
      Closing.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (h) At
      each
      Closing, the Placement Agent shall have received a certificate of the Secretary
      of the Company, dated, as applicable, as of the date of such Closing, certifying
      to the charter, by-laws, good standing in their respective states of
      incorporation and board resolutions relating to the Placement of, as applicable,
      the Company.

     

    (i) All
      proceedings taken in connection with the issuance, sale and delivery of the
      Securities shall be reasonably satisfactory in form and substance to the
      Placement Agent and its counsel.

     

    (j) On
      or
      prior to or following the Initial Closing Date or the date of any Subsequent
      Closing, as the case may be, the Placement Agent shall have been furnished
      with:
      (i) such information, documents and certificates as it may reasonably require
      for the purpose of enabling it to review the matters referred to in this Section
      10 and in order to evidence the accuracy, completeness or satisfaction of any
      of
      the representations, warranties, covenants, agreements or conditions herein
      contained, and (ii) such other closing documentation as may be required in
      order
      to affect the applicable Closing or as the Placement Agent may otherwise
      reasonably request.

     

    (k) Any
      certificate or other document signed by any officer of the Company and delivered
      to the Placement Agent and its counsel as required hereunder shall be deemed
      a
      representation and warranty by the Company hereunder as to the statements made
      therein. If any condition to the Placement Agent’s obligations hereunder have
      not been fulfilled as and when required to be so fulfilled, the Placement Agent
      may terminate this Agreement or, if the Placement Agent so elects, in writing
      waive any such conditions which have not been fulfilled or extend the time
      for
      their fulfillment. In the event that Placement Agent elects to terminate this
      Agreement, Placement Agent shall notify the Company of such election in writing.
      Upon such termination, neither party shall have any further liability nor
      obligation to the other except as provided in Section 11 hereof. 

     

    (l) If
      there
      is more than one Closing, then at each such Closing there shall be delivered
      to
      the Placement Agent updated opinions, certificates or other information
      described in this Section 10.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      
        11.
          INDEMNIFICATION

      

    

     

    (a) The
      Company agrees to indemnify and hold harmless the Placement Agent, each person
      who controls the Placement Agent within the meaning of the Securities Act,
      Section 20(a) of the Exchange Act or any applicable statute, and each partner,
      director, officer, employee, agent and representative of the Placement Agent
      and
      its representatives from and against any loss, damage, expense, liability or
      claim whatsoever, or actions or proceedings in respect thereof (including,
      without limitation, reasonable attorneys’ fees and expenses incurred in
      investigating, preparing or defending against any litigation commenced,
      collectively “Damages”)
      which
      any such person or entity may incur or which may be made or brought against
      any
      such person arising out of or based upon, in whole or in part: (i) any breach
      or
      alleged breach of any of the agreements, representations or warranties of the
      Company contained in or contemplated by this Agreement or the Subscription
      Documents, including, without limitation, those arising out of or based on
      any
      alleged untrue statement of a material fact or omission to state a material
      fact
      required to be stated in the Memorandum or the Subscription Documents or
      necessary in order to make the statements appearing therein not misleading
      in
      the light of the circumstances in which they were made, (ii) any untrue
      statement or alleged untrue statement of material fact contained in any
      information or documents executed in favor of or furnished or made available
      to
      the Placement Agent by the Company, (iii) any omission or alleged omission
      to
      state in any information or documents executed in favor of or furnished or
      made
      available to the Placement Agent by the Company a material fact necessary to
      make the statements therein not misleading, (iv) any violation of any federal
      or
      state securities laws attributable to the Placement, (v) any violation of law
      by
      the Company or any affiliate thereof, or any director, officer, employee, agent
      or representative of any of them, related to or arising out of the Placement,
      and (vi) the services provided by the Placement Agent pursuant to the terms
      of
      this Agreement; except, with respect to subsection (vi), to the extent that
      any
      Damages are determined by a final unappealable order of a court of competent
      jurisdiction to have directly resulted from the gross negligence or willful
      misconduct of the Placement Agent, provided,
      however,
      that if
      the Company has indemnified the Placement Agent pursuant to Section 11(a)(vi)
      and such judicial determination has been made, then the Placement Agent shall
      promptly remit to the Company any amounts relating to such judicial
      determination and which were provided pursuant to the Section 11(a)(vi). This
      indemnity agreement by, and the agreements, warranties and representations
      of,
      the Company shall survive the offer, sale and delivery of the Units and the
      termination of this Agreement and shall remain in full force and effect
      regardless of any investigation made by or on behalf of any person indemnified
      hereunder, and termination of this Agreement and acceptance of any payment
      for
      the Units hereunder.

     

    (b) The
      Placement Agent agrees to indemnify and hold harmless the Company and its
      affiliates, any person who controls any of them within the meaning of the
      Securities Act, Section 20(a) of the Exchange Act or any applicable statute,
      and
      each officer, director, employee, agent and representative of the Company or
      any
      of its affiliates from and against any Damages which any such person or entity
      may incur or which may be made or brought against any such person, but only
      to
      the extent the same arises out of or is based upon: any untrue
      statement of a material fact in any information provided to the Company in
      writing by the Placement Agent, expressly for use in and used in the Memorandum.
      This indemnity agreement by, and the agreements, warranties and representations
      of, the Placement Agent shall survive the offer, sale and delivery of the Units
      and shall remain in full force and effect regardless of any investigation made
      by or on behalf of any person indemnified hereunder, and termination of this
      Agreement and acceptance of any payment for the Units
      hereunder.

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (c) If
      any
      action is brought against a party (the “Indemnified
      Party”)
      in
      respect of which indemnity may be sought against one or more other parties
      (the
“Indemnifying
      Party”
or
      “Indemnifying
      Parties”),
      the
      Indemnified Party shall promptly notify the Indemnifying Party or Parties in
      writing of the institution of such action; provided,
      however,
      the
      failure to give such notice shall not release the Indemnifying Party or Parties
      from its or their obligation to indemnify the Indemnified Party hereunder except
      to the extent the Indemnifying Party actually incurs damage by reason of such
      failure and shall not release the Indemnifying Party or Parties from any other
      obligations or liabilities to the Indemnified Party in any event. The
      Indemnifying Party or Parties may at its or their own expense elect to assume
      the defense of such action, including the employment of counsel reasonably
      acceptable to the Indemnified Party; provided,
      however,
      that no
      Indemnifying or Indemnified Party shall consent to the entry of any judgment
      or
      enter into any settlement by which the other party is to be bound without the
      prior written consent of such other party, which consent shall not be
      unreasonably withheld. In the event the Indemnifying Party or Parties assume
      a
      defense hereunder, the Indemnified Party shall be entitled to retain its own
      counsel in connection therewith and, except as provided below, shall bear the
      fees and expenses of any such counsel, and counsel to the Indemnified Party
      or
      Parties shall cooperate with such counsel to the Indemnifying Party in
      connection with such proceeding. If an Indemnified Party reasonably determines
      that there are or may be differing or additional defenses available to the
      Indemnified Party which are not available to the Indemnifying Party, or that
      there is or may be a conflict between the respective positions of the
      Indemnifying Party and of the Indemnified Party in conducting the defense of
      any
      action, then the Indemnifying Party shall bear the reasonable fees and expenses
      of any counsel retained by the Indemnified Party in connection with such
      proceeding. All references to the Indemnified Party contained in this Section
      11(c) include, and extend to and protect with equal effect, any persons who
      may
      control the Indemnified Party within the meaning of the Securities Act, Section
      20(a) of the Exchange Act or any applicable statute, any successor to the
      Indemnified Party and each of its partners, officers, directors, employees,
      agents and representatives. The indemnity agreements set forth in this Section
      11 shall be in addition to any other obligations or liabilities of the
      Indemnifying Party or Parties hereunder or at common law or otherwise.
      Notwithstanding anything herein to the contrary, in no event shall the Placement
      Agent be obligated to indemnify any person or entity in an amount in excess
      of
      the gross consideration received by the Placement Agent for services rendered
      hereunder.

     

    (d) If
      recovery is not available under the foregoing indemnification provisions of
      this
      Section 11, for any reason other than as specified therein, the party entitled
      to indemnification by the terms thereof shall be entitled to contribution to
      losses, damages, liabilities and expenses of the nature contemplated by such
      indemnification provisions. In determining the amount of such contribution,
      there shall be considered the relative benefits received by the Company on
      the
      one hand, and the Placement Agent on the other hand from the Placement, the
      parties’ relative Knowledge and access to information concerning the matter with
      respect to which the claim was asserted, the opportunity to correct and prevent
      any statement or omission, the relative culpability of the parties, the relative
      benefits received by the parties and any other equitable considerations
      appropriate under the circumstances. No party shall be liable for contribution
      with respect to any action or claim settled without its consent. 

     

    (e) The
      relative benefits received by the Company, on the one hand, and the Placement
      Agent, on the other hand, in connection with the Placement pursuant to this
      Agreement shall be deemed to be in the same respective proportions as the total
      net proceeds from the Placement pursuant to this Agreement (before deducting
      expenses) received by the Company and the total cash remuneration received
      by
      the Placement Agent bear to the aggregate offering price of the
      Securities.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (f) Any
      party
      entitled to contribution will, promptly after receipt of notice of commencement
      of any action, suit or proceeding against such party in respect of which a
      claim
      for contribution may be made against another party or parties under this Section
      11, notify such party or parties from whom contribution may be sought, but
      the
      omission to so notify such party or parties shall not relieve the party or
      parties from whom contribution may be sought from any obligation it or they
      may
      have under this Section 11 or otherwise. For purposes of this Section 11, each
      person, if any, who controls a party to this Agreement within the meaning of
      Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
      have
      the same rights to contribution as that party to this Placement
      Agreement.

     

    (g) The
      Company and the Placement Agent agree that it would not be just and equitable
      if
      contribution pursuant to this Section 11(d) were determined by pro rata
      allocation or by any other method of allocation which does not take account
      of
      the equitable considerations referred to above in this Section 11(d). The
      aggregate amount of losses, liabilities, claims, damages and expenses incurred
      by an indemnified party and referred to above in this Section 11(d) shall be
      deemed to include any legal or other expenses reasonably incurred by such
      indemnified party in investigating, preparing or defending against any
      litigation, or any investigation or proceeding by any governmental agency or
      body, commenced or threatened, or any claim whatsoever based upon any such
      untrue or alleged untrue statement or omission or alleged omission.

     

    (h) Notwithstanding
      the provisions of this Section 11(d), the Placement Agent shall not be required
      to contribute any amount in excess of the amount by which its commissions
      received pursuant to Section 3(b) hereof exceeds the amount of any Damages
      which
      the Placement Agent has otherwise been required to pay by reason of such untrue
      or alleged untrue statement or omission or alleged omission.

     

    (i) No
      person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the 1933 Act) shall be entitled to contribution from any person who was not
      guilty of such fraudulent misrepresentation.

     

    (j) In
      any
      claim for indemnification for United States Federal or state securities law
      violations, the party seeking indemnification shall place before the court
      the
      position of: (i) the SEC and (ii) if applicable, any state securities
      commissioner or agency having jurisdiction with respect to the issue of
      indemnification for securities law violations.

     

    12. NO
      THIRD PARTY RIGHTS

     

    The
      agreements set forth in this Agreement have been made and are made solely for
      the benefit of the Company, the Placement Agent, and the respective affiliates,
      heirs, personal representatives and permitted successors and assigns thereof,
      and except as expressly provided herein nothing expressed or mentioned herein
      is
      intended or shall be construed to give any other person, firm or corporation
      any
      legal or equitable right, remedy or claim under or in respect of this Agreement
      or any representation, warranty or agreement herein contained. The term
“successors and assigns” as used herein shall not include any purchaser of any
      Units merely because of such purchase.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    13. FORCE
      MAJEURE

     

    Neither
      party will be liable to the other by reason of any failure in performances
      of
      this Agreement if the failure arises out of the unavailability of third party
      communication facilities or energy sources or acts of God, acts of governmental
      authority, fires, strikes, delays in transportation, riots or war, or any cause
      beyond the reasonable control of such party.

     

    14. NOTICES

     

    All
      notices, requests, consents and other communications required or permitted
      under
      this Agreement shall be in writing and shall be (as elected by the person giving
      such notice) hand delivered by messenger or courier service, transmitted by
      fax,
      or mailed by registered or certified mail (postage prepaid), return receipt
      requested, addressed to:

     

    Placement
      Agent:

    
      	 	
              With
                a copy to:

            
	
              Newbridge
                Securities Corporation

            	
              Gunster,
                Yoakley & Stewart P.A.

            
	
              5200
                Town Center Circle, Suite 201

            	
              500
                East Broward Blvd., Suite 1400

            
	
              Boca
                Raton, FL 33486

            	
              Fort
                Lauderdale, FL 33394

            
	
              Attn:
                Carlo W. Corzine

            	
              Attn:
                Robert C. White, Esq.

            
	
              Tel:
                (561) 395-1220

            	
              Tel:
                (954) 468-1360

            
	
              Fax:
                (561) 417-0224

            	
              Fax:
                (954) 888-2037

            

    

    

    Company:

    
      	 	
              With
                a copy to:

            
	
              Interstate
                Data USA, Inc.

            	
              Blank
                Rome, LLP

            
	
              2150
                Carter Avenue

            	
              1200
                N. Federal Highway, Suite 417

            
	
              Ashland,
                Kentucky 41101

            	
              Boca
                Raton, FL 33432

            
	
              Attn:
                Randy Carpenter, President

            	
              Attn:
                Rebecca G. DiStefano

            
	
              Tel:
                (606) 324-0048

            	
              Tel:
                (561) 417-8100

            
	
              Fax:
                (713) 961-3845

            	
              Fax:
                (561) 417-8101

            

    

     

    or
      to
      such other address as any party may designate by notice complying with the
      terms
      of this Section. Each such notice shall be deemed delivered (a) on the date
      delivered, if by messenger or courier service; (b) on the date of the
      confirmation of receipt, if by fax; and (c) either upon the date of receipt
      or refusal of delivery, if mailed.

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    15. BINDING
      EFFECT

     

    All
      of
      the terms and provisions of this Agreement shall be binding upon, inure to
      the
      benefit of, and be enforceable by the parties and their respective legal
      representatives, successors and permitted assigns, whether so expressed or
      not.

     

    16. ASSIGNMENTS

     

    No
      party
      shall assign his or its rights or obligations under this Agreement without
      the
      prior written consent of each party to this Agreement, which consent can be
      withheld in the sole discretion of any party.

     

    17. GOVERNING
      LAW

     

    This
      Agreement and all transactions contemplated by this Agreement shall be governed
      by, and construed and enforced in accordance with, the internal laws of the
      State of Florida without regard to principles of conflicts of laws.

     

    18. JURISDICTION
      AND VENUE

     

    The
      parties acknowledge that a substantial portion of the negotiations and
      anticipated performance of this Agreement occurred or shall occur in Palm Beach
      County, Florida. Any civil action or legal proceeding arising out of or relating
      to this Agreement shall be brought in the courts of record of the State of
      Florida in Palm Beach County or the United States District Court, Southern
      District of Florida. Each party consents to the jurisdiction of such Florida
      court in any such civil action or legal proceeding and waives any objection
      to
      the laying of venue of any such civil action or legal proceeding in such Florida
      court. Service of any court paper may be effected on such party by mail, as
      provided in this Agreement, or in such other manner as may be provided under
      applicable laws, rules of procedure or local rules.

     

    19. ENFORCEMENT
      COSTS

     

    If
      any
      civil action, arbitration or other legal proceeding is brought for the
      enforcement of this Agreement, or because of an alleged dispute, breach, default
      or misrepresentation in connection with any provision of this Agreement, the
      successful or prevailing party or parties shall be entitled to recover
      reasonable attorneys' fees, court costs, sales and use taxes and all expenses
      even if not taxable as court costs (including, without limitation, all such
      fees, taxes, costs and expenses incident to arbitration, appellate, bankruptcy
      and post-judgment proceedings), incurred in that proceeding, in addition to
      any
      other relief to which such party or parties may be entitled. Attorneys' fees
      shall include, without limitation, paralegal fees, investigative fees,
      administrative costs, sales and use taxes and all other charges billed by the
      attorney to the prevailing party (including any fees and costs associated with
      collecting such amounts).

     

    20. AMENDMENTS

     

    The
      provisions of this Agreement may not be amended, supplemented, waived or changed
      orally, but only by a writing signed by all parties to this Agreement and making
      specific reference to this Agreement.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    21. SEVERABILITY

     

    If
      any
      provision of this Agreement is or becomes illegal, invalid or unenforceable
      in
      any respect under the law of any jurisdiction, neither the legality, validity
      or
      enforceability of the remaining provisions of this Agreement nor the legality,
      validity or enforceability of such provision under the law of any other
      jurisdiction shall in any way be affected or impaired thereby. If any provision
      of this Agreement may be construed in two or more ways, one of which would
      render the provision invalid or otherwise voidable or unenforceable and another
      of which would render the provision valid and enforceable, such provision shall
      have the meaning which renders it valid and enforceable.

     

    22. SECTION
      HEADINGS; DEFINED TERMS

     

    Numbered
      and titled section headings and defined terms are for convenience only and
      shall
      not be construed as amplifying or limiting any of the provisions of this
      Agreement. 

     

    23. COUNTERPARTS

     

    This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which taken together shall constitute one and
      the
      same instrument. Confirmation of execution by electronic transmission of a
      facsimile signature page shall be binding upon any party so
      confirming.

     

    24. ENTIRE
      AGREEMENT

     

    This
      Agreement and all exhibits and schedules attached to this Agreement, if any,
      represent the entire understanding and agreement between the parties with
      respect to the subject
      matter of this Agreement, and supersedes all other negotiations, understandings
      and representations (if any), whether oral or written, made by and between
      such
      parties.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Please
      confirm that the foregoing correctly sets forth your understanding of our
      agreement and return one executed copy of this Agreement to our office at 5200
      Town Center Circle, Suite 201, Boca Raton, Florida 33486. This Placement Agency
      Agreement is executed and shall be effective as of the date set forth
      above.

     

    
      	
              Very
                truly yours,

            
	 
	
              NEWBRIDGE
                SECURITIES CORPORATION

            
	 	 
	
              By:

            	/s/
              D. Aguililla
	 	
              Name:
                Douglas K. Aguililla

            
	 	
              Title:
                Director of Investment Banking

            

    

    

    Accepted
      and agreed to this ______day of____________, 2007, Ashland,
      Kentucky.

     

    
      	
              INTERSTATE
                DATA USA, INC.

            
	 	 
	
              By:

            	/s/ Randy
              Carpenter
	 	
              Randy
                Carpenter, President

            

    

    
      
        
        

      

      
        28

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