Document:

Exhibit 10.14

EXHIBIT 10.14

Wellington Land Development, LLC

______________________________________________________________________

The Quantum Group, Inc.

3420 Fairlane Farms Road

Suite C & D

Wellington, FL  33414

Please be aware that we do not send invoices for your monthly rental payments.

Your Next rental payment will be due on    09/01/06             ,

In the amount of $    9395.06                , consisting of:

Base Rent $         8641.66                                

Park Security Contribution $    180.00              

Sales Tax (6.5%) $    573.40                            

Total monthly rental payment $    9395.06       

Commencement Date     07/01/06                   

End Date of Lease     06/30/09                        

Your monthly rental payment is due on the first of the month for the current month.  Make rental checks payable to: 

Wellington Land Development LLC

3020 Fairlane Farms Road, # 4

Wellington, FL  33414

We also have a dropbox outside of our office for your convenience.

If you have any questions, please do not hesitate to call me at (561)333-9199.

COMMERCIAL LEASE

Table of Contents

Specific Lease Provisions

1

1.

Quiet Enjoyment

1

2.

The Landlord

1

3.

The Tenant

1

4.

Leased Premises

1

5.

Commencement Date of Lease

1

6.

The End Date of this Lease

1

7.

Security Deposit

1

8.

Permitted Uses of Leased Premises

1

9.

Basic Annual Rent

1

10.

Additional Rent

2

11.

Components of this Lease

2

12.

Date of this Lease

2

Standard Lease Provisions

3

1.

Definitions

3

a.

Adjustment Month

3

b.

Base Month

3

c.

Base Taxes

3

d.

Building

3

e.

CPI

3

f.

Common Areas

3

g.

Environmental Laws

3

h.

Environmental Violation

3

i.

Excess over Base Taxes

4

j.

Hazardous Substance

4

k.

Lease

4

l.

Lease Year

4

m.

Leased Premises

4

n.

Notices

4

o.

Property

4

p.

Provisions of the Lease

5

q.

Real Estate Taxes

5

r.

Tenant’s Proportionate Share

5

2.

Rent

5

a.

Basic Annual Rent

5

b.

Additional Rent

6

3.

Security Deposit

7

4.

Notices

7

5.

Alterations by Tenant

8

6.

Permitted Uses

8

7.

Term of this Lease

8

8.

Landlord’s Obligation to Repair

8

9.

Interruption of Services

8

10.

Sales or Lease Tax

9

11.

Utilities

9

12.

Failure to Deliver Possession

9

13.

Environmental Matters

9

a.

No Environmental Violations

9

b.

Tenant’s Obligations/ Financial Assurances

9

c.

Compliance with all Laws

10

d.

Notice to Landlord

10

e.

Survival

10

14.

Assignment/ Subletting

10

15.

Tenant’s Obligation to Repair

10

16.

Tenant’s Obligation to Maintain Insurance

11

a.

Public Liability

11

b.

Worker’s Compensation

11

c.

Casualty

11

d.

Other

12

17.

Increased Hazards

11

18.

Liens

12

a.

No Liens

12

b.

Interests of Landlord are not subject to Liens

12

c.

Liens on Property of Tenant

12

19.

Non-Liability of Landlord

12

a.

Present Landlord Only

12

b.

Successors and Assigns

12

c.

Limitations on Liability

13

20.

Limitation on Recovery against Landlord

13

21.

Landlord’s Right to Assign, etc.

13

22.

Indemnification

13

23.

Subordination

14

24.

Right of Landlord to Perform for Tenant

14

25.

Right of Entry

14

26.

Surrender of Leased Premises

14

27.

Signs

15

28.

Continuous Operation of Business

15

29.

Compliance with all Laws, etc.

15

30.

Compliance with ADA

15

31.

Changes by Landlord

16

32.

Damage to the Property

16

33.

Condemnation and Eminent Domain

16

a.

Taking

16

b.

Damages

16

34.

Defaults

17

a.

Failure to Pay

17

b.

Failure to Perform

17

c.

Failure to Adhere to Prohibition

17

d.

Execution, etc.

17

e.

Desertion

17

f.

Succession

17

g.

Trustee

17

h.

Emcubrence

17

35.

Landlord’s Remedies in Case of Default

17

a.

All Rights and Remedies Available

18

b.

Take Possession

18

c.

Relet

18

d.

Recovery

18

e.

Separate Suits

18

f.

Landlord’s Option

19

36.

Additional Remedy of Landlord

19

37.

Landlord’s Right to Injunctive and Other Relief

19

38.

Late Payment Charge

19

39.

Interest on Unpaid Amounts

20

40.

Cure Period

20

a.

Monetary Defaults

20

b.

Non-monetary Defaults

20

41.

Miscellaneous

20

a.

Rules and Regulations

20

b.

All Defaults are Material and Significant

20

c.

Non-Waiver

20

d.

Attorney’s Fees

21

e.

Severability

21

f.

Entire Agreement

21

g.

Captions

21

h.

Recording

21

i.

Brokers

21

j.

Corporate Authority

21

k.

Estoppel Certificate

21

l.

Accord and Satisfaction

21

m.

Successors

21

n.

Law

22

o.

Radon Gas Notification

22

EXHIBIT A

CERTIFICATE OF COMMENCEMENT DATE

 BASE MONTH FOR CPI

REAL ESTATE TAX BASE YEAR

The following is hereby confirmed regarding the Lease dated 07/01/06  between Wellington Land Development, LLC as Landlord, and The Quantum Group, Inc. as Tenant for the Leased Premises known as 3420 Fairlane Farms Road, Suite C & D,  Wellington, FL 33414 .

The Commencement Date is: 

   07/01/06

The CPI Base Month

 is:  

         

   April 2006

The Real Estate Tax Base Year is:    2005 

Please sign below and return the original to the Landlord.

Acknowledged and agreed to:

The Quantum Group. Inc.

_____________________________________

Signature

_____________________________________

Typed/ Printed Name

_____________________________________

Date

EXHIBIT C

RULES AND REGULATIONS

PARKING: 

Parking spaces are located in the front and rear of the building. 

 

1.

The parking or storage of any vehicle not used on a daily basis for your transportation or in the operation of your business is prohibited.  This would include motor homes, travel trailers, utility trailers, trucks, boats, vans, etc.

2.

Any and all vehicles to be left on site overnight must first be approved by the Landlord on a case by case basis.

3.

All loading and unloading of goods is to take place at the rear of the building.

SIGNAGE:  

3500, 3460, 3420, 3400, 3380, 3340 & 3020 Fairlane Farms Road - Each Tenant shall be entitled to one sign per occupied bay.  The sign shall be pre-cut vinyl letters mounted on the outside of the glass.  The sign shall be located in the upper half of the front door to the bay.  The Tenant’s sign shall cover an area not greater than one foot by two feet.  The sign can be up to two colors, one of which must be white.  Company Logos are allowable by the combination of lettering and logo cannot cover an area greater than that stated above.  Any style lettering is acceptable.

11101 S. Crown Way - All Tenants of the 11101 Building must comply with the 11101  Master Sign Plan – see attached.  

11120 S. Crown Way - All Tenants of the 11120 Building must comply with the 11101  Master Sign Plan (see attached), except for sign size. Maximum size at the 11120 Building is 20’x3’ or 10’x2’6”, depending on bay size.

No signage shall be installed without prior approval of the Landlord.  Two sets of shop drawings are to be supplied to Landlord for Landlord’s approval.  Any signage installed without Landlord’s approval will be removed at Tenant’s expense.

DUMPSTERS:

The dumpsters are for the use of all Tenants.  Please be aware that any items left outside the dumpster will not be picked up.  Please place all items in the dumpster.  If the dumpster is full, please hold your items until it has been emptied.  All cardboard boxes should be broken down and placed in the cardboard recycle dumpster.  The dumpster is for trash accumulated in Tenant’s suite only.  Trash from off site is not to be dumped in the dumpsters.   Dumpsters are for typical office waste only.  Pallets, spools, crates, etc. are NOT permitted in the dumpsters and it is the Tenants responsibility to have them removed 

EXHIBIT C (cont’d)

RULES AND REGULATIONS

at their expense.  Excessive trash may result in the Tenant providing a dumpster for their own use.

MISCELLANEOUS:

·

Animals - No dogs or other animals, other than Seeing Eye Dogs, shall be permitted in the building, on or about the common areas, or in the leased premises.

·

Hurricane Preparation - In the event of a hurricane, the Tenant will secure leased premises, including the placement of hurricane shutters.

Acknowledged and agreed to:

The Quantum Group, Inc.

____________________________

Signature

____________________________

Typed/ Printed Name

____________________________

Date

GUARANTEE OF LEASE

1.

This Guarantee of Lease involves the following:

a

  The Quantum Group, Inc.          ,  “Tenant”

3420 Fairlane Farms Road, Suite C & D, Wellington, FL  33414 “Tenant Address”

b

  Wellington Land Development, LLC                                   “Landlord”

c

  Noel Guillama                                                                  “Guarantor”

d.

                                                                              “Guarantor Address”

e

  3420 Fairlane Farms Road, Suite C & D, Wellington, FL   “Property”

2.

Tenant wants Landlord to enter into a lease (the “Lease”) dated 07/01/06, in which Tenant will lease the Property from Landlord.  Landlord will not enter into the Lease unless Guarantor agrees to this Guarantee of Lease.  Because of the relationship between Tenant and Guarantor, there is a significant benefit to Guarantor if Landlord enters into the Lease.  Guarantor has reviewed the Lease and has received, or has had the opportunity to receive, legal advice.

3.

Guarantor agrees that without notice from Landlord being required and also within five (5) days of demand by Landlord if Landlord chooses to give notice that Guarantor shall do all of the following:

a.

Guarantor will pay all money due to Landlord under the Lease which Tenant fails to pay, however the obligation of Guarantor to pay such money shall cease once the Guarantor has paid the value of lease (the “Guarantor’s Maximum Payment Amount”) to Landlord.   Simultaneously with each payment, Guarantor must give written notice to Landlord that payment is to be included towards the Guarantor’s Maximum Payment Amount.  Each time Guarantor makes a payment, Tenant agrees that Tenant is in default and as a result, Landlord forever thereafter has the option to:

I.

Treat the payment as coming from the Tenant and allow the Lease to remain in effect, or

II.

Shorten the term of the Lease to any date stated in a notice to Tenant from Landlord; or

III.

Exercise any rights and remedies granted to Landlord under the Lease if Tenant defaults.

b.

Guarantor will at Guarantor’s expense cure all defaults of Tenant under the Lease (except for the payment of money due to Landlord) and will perform as required of Tenant under the Lease and Guarantor’s expenses in doing so shall not be included in the Guarantor’s Maximum Payment Amount.

4.

Landlord and Tenant may change the Lease.  Guarantor is bound to any changes in the Lease agreed to by Landlord and Tenant.  While Landlord is not obligated to give any concessions or waive any default, if Landlord agrees to do so, Guarantor remains bound as if the concession or waiver had not occurred.

5.

Guarantor’s liability is not changed by (a) the release or discharge of Tenant under any creditors’, receivership, bankruptcy, or other proceedings, (b) the impairment, limitation, or modification of the liability of the Tenant or the estate of the Tenant in bankruptcy, or of any remedy for the enforcement of Tenant’s liability under the Lease, resulting from the operation of any present or future provision of any bankruptcy laws or other statue or from the decision of any court;  (c) the rejection or disaffirmance of the Lease by Tenant, or (d)  any disability or other defense of Tenant.

6.

This Guarantee of Lease may not be modified except in writing signed by Landlord, Tenant, and Guarantor.  Venue for any litigation based upon this Guarantee of Lease shall lie in any jurisdiction chosen by Landlord.  Landlord is entitled to the recovery of its attorney’s fees if it is the prevailing party in any litigation based upon this Guarantee of Lease.

  

				
	Witnesses to signatures:

	                            

	Tenant:  The Quantum Group, Inc.

	  

	 
	 
	 

	  

	 
	 
	 

	  

	 
	 
	 

	 
	 
	 
	 

	Signature of witness # 1

	 
	 
	 

	  

	 
	 
	 

	  

	 
	 
	 

	 
	 
	 

	Signature of witness # 2

	 
	Guarantor – Noel Guillama

	  

	 
	 
	 

	 
	 
	Date:

	                                                       

	  

	 
	 
	 

	State of   Florida                             

	 
	 
	 

	 
	 
	 
	 

	County of   Palm Beach                 

	 
	 
	 

This Guarantee of Lease was sworn to and subscribed before me by the Guarantor and Tenant on _______________________.  The Guarantor and Tenant are personally known to me or presented the following identification:  Copy of  Drivers License.

			
	 
	 
	                                                     

	Signature of Notary Public

	               

	Stamp or Seal

	 

	 
	 

	 
	 
	 

	Printed name of Notary Public

	 
	 

SECURITY ADDENDUM

This ADDENDUM (“ADDENDUM”) is part of the COMMERCIAL LEASE dated 07/01/06 between Wellington Land Development as Landlord, and The Quantum Group, Inc., as Tenant for the Leased Premises known as 3420 Fairlane Farms Road, Suite C & D, Wellington, FL  33414. 

This ADDENDUM controls in any conflict between this ADDENDUM and the COMMERCIAL LEASE.  The COMMERCIAL LEASE binds all parties and is in force according to its terms, except as modified herein.

A.

Tenant must provide security: Landlord has no obligation to provide security for persons or property.  Security is the responsibility of Tenant.  Tenant requests Landlord to arrange for a third party to provide security to Wellington Business Centre.

B.

The contract: Landlord will within 30 days enter into a contract it deems reasonable for a third party to provide security.  Landlord may terminate that contract and not enter into another.

C.

Landlord has no liability: Landlord has no liability: 1) for any act or omission by any providers of security; and 2) if Landlord terminates all contracts with security providers.  Tenant releases and holds harmless Landlord and its officers, directors, employees, agents and trustees from liability for acts of omissions by providers of security, and for any failure to provide security.

D.

No warranty or representation: Landlord makes no warranty or representation as to security that may be provided, or that any security will prevent theft, harm, or death to persons or property.  Tenant must decide if the security is sufficient.  If the security is insufficient, Tenant must arrange at its expense for the security required by Tenant; however, Tenant remains obligated hereunder.

E.

Tenant’s contribution: If there is a contract with a third party to provide security, Tenant must pay $180.00 plus sales tax and Tenant’s proportionate share of increases in costs, as Additional Rent on the first day of each month hereafter throughout the Term of the Lease.

			
	Dated this _________ day of ________________, 2006

	  

	     

	 

	Landlord:

	 
	Tenant: 

	 
	 
	 

	Wellington Land Development, LLC

	 

	The Quantum Group, Inc.

	  

	 
	 

	 

	 
	 

	 
	 
	                                                         

	Signature

	 
	Signature

	As Managing Member

	 
	 

	  

	 
	 

	Guy A. Mancini

	 
	 

	Printed/ Typed

	 
	Printed/ Typed

			

ADDENDUM I

This Addendum (“Addendum”) is part of the COMMERCIAL LEASE dated 07/01/06 between Wellington Land Development as Landlord and The Quantum Group, Inc., as Tenant for the Leased Premises known as 3420 Fairlane Farms Road, Suite C & D,  Wellington, FL  33414.

 

1.

Tenant is required to pay $26,415.12 at signing of Lease - Security Deposit $7,625.00,

July Rent $0.00, August Rent $8,641.66, Last Month Rent $8,641.66.

2.

July rental payment is waived to allow for renovations and improvements.

3.

Landlord states that, to the best of his knowledge, the electrical system is working properly.  Any repairs that need performed on existing electrical system will be at Landlords expense.

4.

A/C inspection to be performed upon occupancy, with Tenant present.

			
	Dated this _________ day of ________________, 2006

	  

	     

	 

	Landlord:

	 
	Tenant: 

	 
	 
	 

	Wellington Land Development, LLC

	 
	The Quantum Group, Inc.

	  

	 
	 

	 

	 
	 

	 
	 
	                                                         

	Signature

	 
	Signature

	As Managing Member

	 
	 

	  

	 
	 

	Guy A. Mancini

	 
	 

	Printed/ Typed

	 
	Printed/ Typed

	  

	 
	 

	  

	 
	 

	Witnesses:

	 
	Witnesses:

	   

	 
	 

	  

	 
	 

	1 __________________________________________

	 
	1 _________________________________________

	  

	 
	 

	  

	 
	 

	2 __________________________________________

	 
	2 _________________________________________

	 
	 
	 

	 
	 
	 

COMMERCIAL LEASE

Specific Lease Provisions

1.

Quiet Enjoyment:  The Tenant hereby leases from the Landlord, and the Landlord hereby leases to the Tenant, the Leased Premises.  Subject to all of the Provisions of this Lease, if the Tenant complies with all of the Tenant’s obligations set forth in this Lease, the Landlord shall not disturb the Tenant’s quiet enjoyment of the Leased Premises during the term of this Lease.

2.

The Landlord:  (“Landlord”) The name of the Landlord is Wellington Land Development, LLC.  The address of the Landlord is 3020 Fairlane Farms Road, Suite 4,  Wellington, FL 33414.

3.

The Tenant: (“Tenant”) The name of the Tenant is  The Quantum Group, Inc.   The Tenant is a Florida  Corporation.  The address of the Tenant is 3420 Fairlane Farms Road, Suite C & D, Wellington, FL  33414.

4.

Leased Premises:  (“Leased Premises”)  The address of the Leased Premises is 3420 Fairlane Farms Road, Suite C & D, Wellington, FL  33414. The Leased Premises includes all improvements on the Leased Premises.  The Tenant has inspected the Leased Premises and finds it to be in acceptable condition.  The Leased Premises has 6,100 rentable square feet and the Property has 10,600 rentable square feet. 

5.

Commencement Date of Lease:  (“Commencement Date”) The Commencement Date of the term of this Lease is  07/01/06.

6.

The End Date of this Lease:  (“End Date”) The term of this Lease shall cease on the End Date which is 06/30/09,  3 year(s) from the Commencement Date. 

7.

Security Deposit: (“Security Deposit”) The Security Deposit amount is $7,625.00.            The Security deposit becomes non-refundable if Tenant does not take possession of Suite by Commencement date.   

8.

Permitted Uses of Leased Premises: (“Permitted Uses”) The Leased Premises may be used only for uses approved under the Light Industrial Classification of the PIPD Code of the Palm Beach County Zoning Code and for no other purposes whatsoever.  All of the Tenant’s interior buildout must have prior approval by Landlord, and must be in compliance or exceed the Village of Wellington’s and Palm Beach County Building and Zoning Codes. 

9.

Basic Annual Rent: (“Basic Annual Rent”) The Basic Annual Rent during the first Lease Year is $103,700.00.   Each monthly installment of Basic Annual Rent during the first Lease Year is  $8,641.66.  After the first Lease Year, Basic Annual Rent and each monthly installment of Basic Annual Rent are increased as set forth in the Standard Lease Provisions.

10.

Additional Rent: (“Additional Rent”) The Tenant is obligated to pay Additional Rent as set forth in the Standard Lease Provisions.

1

11.

Components of this Lease:  This component of the Lease is referred to as the “Specific Lease Provisions”.  This Lease consists of all the following:

a.

The Specific Lease Provisions.

b.

The Standard Lease Provisions.

c.

Exhibit “A” – Certificate of Commencement Date & Base Month for CPI

d.

Exhibit “B” – Diagram of the Leased Premises

e.

Exhibit “C” – Rules and Regulations

f.

Security Addendum;  Addendum I

g.

Guarantee of Lease

12.

Date of this Lease:  The date of this Lease is 07/01/06.

			
	Landlord:

	 
	Tenant: 

	  

	 
	 

	Wellington Land Development, LLC

	 
	The Quantum Group, Inc.

	  

	 
	 

	 

	 
	 

	  

	 
	                                                         

	Signature

	 
	Signature

	As Managing Member

	 
	 

	  

	 
	 

	Guy A. Mancini

	 
	 

	Printed/ Typed

	 
	Printed/ Typed

	  

	 
	 

	  

	 
	 

	Witnesses:

	 
	Witnesses:

	   

	 
	 

	  

	 
	 

	1 __________________________________________

	 
	1 _________________________________________

	  

	 
	 

	  

	 
	 

	2 __________________________________________

	 
	2 _________________________________________

	 
	 
	 

2

COMMERCIAL LEASE

Standard Lease Provisions

1.

Definitions:  Some of the words used in this Lease have the meanings set forth below:

a.

Adjustment Month:  For each Lease Year after the first Lease Year, the “Adjustment Month” is the ninth calendar month of the then preceding Lease Year.

b.

Base Month:  “Base Month” is the calendar month that is three months prior to the month in which the Commencement Date of this Lease falls.

c.

Base Taxes:  “Base Taxes” means the Real Estate Taxes assessed on the Property the year prior to the Commencement Date.   For Renewal Leases, the Base Tax Year shall carryover as set forth in Exhibit A. 

d.

Building:  “Building” is the structure within which the Leased Premises is located, together with the real restate on which the structure is located and all other improvements and appurtenances thereto from time to time designated by Landlord as being a part of the Building, including but not limited to any landscaping, sidewalks, drives, common areas, parking areas, walkways, hallways, elevators, stairways, lobbies, and utility rooms.

e.

CPI:  “CPI” means the Consumer Price Indexes for all Urban Consumers and Urban Wage Earners and Clerical Workers, U.S. City Average (1967=100) using the table entitled, “All Urban Consumers,” issued by the U.S. Department of Labor, Bureau of Labor Statistics, commonly referred to as Consumer Price Index.  If the publication of the CPI is discontinued or its format changed, the Landlord shall select a regularly published index which in the Landlord’s reasonable judgement most closely parallels the CPI, and such index shall then be used in place of the CPI.

f.

Common Areas:  “Common Areas” are those portions of the Building designated by Landlord for the Tenant’s use in common with others.

g.

Environmental Laws:  “Environmental Laws” shall mean all federal, state, and local laws, regulations, or ordinances, now or hereafter existing 1) which govern or otherwise relate to the use, storage, treatment, transportation, manufacture, refinement, handling, production, or disposal of any hazardous substance, or 2) which deals with protection of the health of any living person or thing or the protection of any part of the environment.

h.

Environmental Violation:  “Environmental Violation” shall mean 1) any direct or indirect discharge, disposal, spillage, emission, escape, pumping, pouring, injection, leaching, release, seepage or filtration of any hazardous substance at, above, upon, under or within the property, or from the Property to real estate contiguous thereto, in violation of any environmental law or in excess of any reportable quantity established under any environmental law, 2) any deposit, storage, dumping, placement or use of any hazardous substance at, above, upon, under or within the property or any real estate contiguous thereto in violation of any environmental law, 3) the abandonment or discarding of any barrels, containers or other receptacles containing any hazardous substances in violation of any environmental laws, either at, above, upon, under or within the property or at any offsite location by Tenant or any subtenant or occupant of the Leased Premises or anyone acting by, through or under 

3

Tenant’s direction or control, 4) any activity which is reasonably likely to result in any liability, cost or expense to Tenant or Landlord or any other owner or occupier of the Leased Premises, or which might result in the creation of a lien on the Leased Premises under any environmental law, and 5) any other material violation of, or noncompliance with, any environmental law.

i.

Excess Over Base Taxes:  “Excess Over Base Taxes” means the real estate taxes on the property which exceed the amount of the base taxes, without regard to whether such excess over base taxes arises from increases in the value of the property, increases in the rate of taxation, changes in the method of calculation, or the imposition of new or different taxes upon the property whether by the same taxing entities or by new or different taxing entities.

j.

Hazardous Substance:  “Hazardous Substance” shall mean 1) any flammable substances, explosives, radioactive material, hazardous material, hazardous wastes, toxic substances, pollutants, contaminants or any related materials or substances specified in any of the environmental law (including any “hazardous substance” as defined in CERCLA), 2) asbestos, radon, and polychlorinated biphenyls, 3) urea formaldehyde, and 4) any chemical, compound, substance or thing which can, may or does pose harm or the threat of harm to any living person or thing or any part of the environment.

k.

Lease:  “Lease,” means both the Specific Lease Provisions and the Standard Lease Provisions.  All portions of the Lease are complimentary, and what is required by one part of the Lease shall be as binding as if required by all parts of the Lease.

l.

Lease Year:  The first Lease Year begins on the first day of the calendar month in which the Commencement Date falls, and ends on the last day of the eleventh calendar month thereafter.  Each Lease Year after the first Lease Year begins on the first calendar month following the preceding Lease Year, and ends on the last day of the eleventh calendar month thereafter.

m.

Leased Premises:  “Leased Premises” is that portion or portions of the building as generally shown by Exhibit “B”.  The Leased Premises has the number of rentable square feet as set forth in the Specific Lease Provisions.  The number of rentable square feet is stated solely for calculation purposes under this lease, and does not constitute a representation of the actual number of square feet of space in the Leased Premises.  The Landlord makes no representation or warranty as to the actual measurements or dimensions of the Leased Premises.  Exhibit “B” is provided as a diagram to identify portion(s) of the building, but does not constitute a representation by Landlord as to the measurements or dimensions of the Leased Premises.

n.

Notices:  “Notices” are all request, statements, demands, correspondence, communications and transmittals sent by any party to this Lease to any other party to this Lease.

o.

Property:  “Property” includes both the Leased Premises and the building.

p.

Provisions of this Lease:  “Provisions of this Lease” means all terms, conditions, statements, requirements, contingencies, provisos, obligations, rights and liability set forth in this Lease.

4

q.

Real Estate Taxes:  “Real Estate Taxes” means all real estate taxes, assessments and levies and all other governmental levies and charges of every kind whatsoever which arise in connection with the ownership, use, occupancy or possession of the Property or any part thereof, including interest on installment payments and all costs and fees (including reasonable attorney’s fees) incurred by Landlord in contesting or negotiating with public authorities with respect to the same.  If at any time during the term of this Lease the methods and/or bases of taxation prevailing at the Commencement Date shall be altered so that in addition to, or in lieu of or as a substitute for the whole or any part of the taxes now levied, assessed or imposed on the Property there shall be a different basis or method of computation, then “Real Estate Taxes” shall include such additional or other methods or bases.

r.

Tenant’s Proportionate Share:  “Tenant’s Proportionate Share” is that part of the Excess over Bases Taxes which the Tenant is responsible to pay for under this Lease as additional rent.  The Tenant’s Proportionate Share of the Excess over Bases Taxes is determined by multiplying the Excess over Base Taxes by a fraction: the numerator of which is the number of rentable square feet of the Leased Premises; and the denominator of which is the number of rentable square feet in the property as determined by the Landlord.

2.

Rent:  All payments of basic annual rent and additional rent shall be made in lawful currency of the United States of America to the Landlord at the Landlord’s address, or at such other place(s) stated in writing by the Landlord, and all payments shall be made in advance and not in arrears.  If the Commencement Date falls on a day other than the first day of a calendar month, then the monthly installment of basic annual rent due for the first calendar month of the first Lease Year shall be prorated.

a.

Basic Annual Rent:  Basic Annual Rent is determined on a Lease Year basis.  On the Commencement Date and on the first day of each and every calendar month during the term of this Lease, the Tenant shall pay to the Landlord a monthly installment of Basic Annual Rent for the then current Lease Year.

i.

During the first Lease Year:  Each monthly installment of basic annual rent during the first lease year in the amount stated in the specific lease provisions.

ii.

After the first Lease Year:

1)

Computation:  The basic annual rent for each Lease Year after the first Lease Year is computed by multiplying the basic annual rent for the first Lease Year by a fraction which has as its numerator the CPI for the adjustment month and as its denominator the CPI for the base month.  The amount of each monthly installment of basic annual rent in each Lease Year after the first Lease Year shall be computed by dividing the basic annual rent for such Lease Year by twelve.

2)

Minimum/Maximum:  Notwithstanding any part of this Lease which is or may appear to be to the contrary, the basic annual rent for any Lease Year after the first Lease 

5

Year shall not be less than 102% or greater than 108% of the basic annual rent in the prior Lease Year.

3)

Confirmation Letter:  Following the Commencement Date the Landlord shall send or deliver to the Tenant the letter attached hereto as Exhibit “A”, with the blank lines filled in with the correct information.  Within 5 days of receiving the letter, the Tenant shall confirm the information set forth therein by executing the letter and sending same back to the Landlord.  In the event that the Tenant shall fail to timely execute and send the letter to the Landlord, the information contained in the letter presented to the Tenant shall be conclusively deemed to be accurate in all respects and shall constitute absolute evidence and proof of the matters set forth therein.

b.

Additional Rent:  Together with the obligation to pay basic annual rent, the Tenant is also obligated to pay additional rent during the term of the Lease.  The failure to timely pay additional rent is a failure to timely pay rent under the provisions of all statutes and laws.

i.

Real Estate Taxes

1)

The Tenant shall pay as additional rent the Tenant’s proportionate share of the excess over base taxes.  If the first Lease Year or the last Lease Year is less than an entire calendar year then the Tenant’s proportionate share of the excess over base taxes shall be prorated for such calendar year.

2)

Upon the Landlord’s receipt of the statement of real estate taxes for each calendar year during the term of this Lease, the Landlord shall calculate the Tenant’s proportionate share of the excess over base taxes and shall send a statement thereof to the Tenant.  The Tenant shall pay the Tenant’s proportionate share of the excess over base taxes within 20 days of the sending of the statement to the Tenant.

3)

If the end of the term of this Lease falls at a time when the Landlord has not yet received a statement of the real estate taxes for that calendar year, the Landlord shall reasonably estimate the Tenant’s proportionate share of the excess over base taxes for that year and the Tenant shall pay same within 20 days of the sending of the statement to the Tenant.

4)

If the Landlord contests the amount of the real estate taxes for the Leased Premises, there shall be added to the excess over base taxes the cost of any such contest, including reasonable attorney’s fees and expenses incurred in such contest.

ii

Other Amounts Due under Lease:  All amounts except Basic Annual Rent to be paid by Tenant under the provisions of this Lease are Additional Rent, and shall be paid by Tenant to Landlord within 5 business days of demand.

iii

Payments by Landlord:  If Landlord pays any money which is the obligation of the Tenant according to the provisions of this Lease, or if the Landlord incurs any expense, including reasonable 

6

attorney’s fees, in the enforcement of the Landlord’s rights under this Lease or the performance of any obligations otherwise imposed upon the Tenant under the provisions of this Lease, then such money paid and such expense incurred is additional rent and shall be paid to Landlord by Tenant within 5 business days of demand therefor.

iv

Tenant’s Excessive Use:  If in the reasonable judgement of the Landlord the Tenant’s use of water, production of trash or garbage, or other acts or omissions on the part of Tenant cause a disproportionate increase in the charges to the Landlord for such items, it is the responsibility of the Tenant to pay the entire amount attributed to such increase in such items as additional rent, and Tenant shall pay same to Landlord upon each demand therefor within 5 business days of the demand.

3.

Security Deposit:  The Security Deposit shall be held by Landlord without interest thereon owing to Tenant, in a separate account or in any general property management account established by Landlord and may be commingled with other funds of the Landlord and other third parties.  Each time the amount of the Security Deposit is diminished by Landlord’s use, retention or application thereof, Tenant shall, within 3 days after Landlord’s demand, deposit additional money with Landlord sufficient to restore the Security Deposit to its original amount.  The obligations to make deposits to restore the Security Deposit are obligations to make payments of additional rent.  Landlord may use, apply or retain the Security Deposit to the extent required for the payment of any sum as to which Tenant is in default or for any sum which Landlord may expend by reason of Tenant’s default on any of the provisions of this Lease.  If Tenant shall comply with all of the provisions of this Lease, the Security Deposit shall be returned to Tenant after the end of the term of this Lease and after delivery of possession of the Leased Premises to Landlord.  Landlord has the right to transfer the Security Deposit to any successor to Landlord’s interest in the Lease, and upon such transfer Landlord is hereby released by Tenant from all liability for the return of such Security Deposit.  The Landlord’s rights to recovery against the Tenant are not limited to the amount of the Security Deposit.

4.

Notices:  All Notices shall be sent to Landlord at the Landlord’s address as set forth in the Specific Lease Provisions, or to such other address as the Landlord shall inform the Tenant in writing.  The Tenant shall also send a copy of each Notice to such persons or entities designated by the Landlord from time to time.  Notice to the Tenant shall be sent to the Tenant’s address as set forth in the Specific Lease Provisions.  Each Notice shall be deemed to have been received 5 days after its deposit into the United States Mail, certified return receipt requested.  After the Commencement Date, Notice to the Tenant may be delivered to the Leased Premises, and is hereby deemed to have been received by the Tenant upon the date delivered whether or not the Tenant actually receives or is aware of the Notice.

5.

Alterations by Tenant:  Tenant shall not make any alterations or additions to the Property, or any part thereof, without the written consent of Landlord, which consent may be withheld for any reason deemed acceptable to Landlord or which 

7

consent may be conditioned upon Tenant performing as required by Landlord, including the payment of any costs incurred by Landlord.

6.

Permitted Uses:  Tenant shall use the Leased Premises only for the Permitted Uses, and then only to the extent that all governmental entities having jurisdiction over the Property approve such uses.  Landlord neither warrants nor represents that the Leased Premises can be used for the Permitted Uses.  The Tenant has conducted its own investigation and has determined by itself that the Leased Premises can be used for the Permitted Uses.  Notwithstanding any other statements in this Lease to the contrary, in no event shall the Tenant use the Leased Premises, or suffer or permit the use of the Leased Premises, in any manner such that the Leased Premises will be or become a place of public accommodation under the terms of Title III of the ASA, 42 USC § 1281, et. seq., or the rules and regulations issued thereunder.  In its use of the Property and in traveling to and from the Property, the Tenant and its officers, directors, agents, employees, servants, contractors and subcontractors shall not disturb any person or entity by creation of excessive or unreasonable light, sound, vibration, smoke, fumes, odors, dust, or pollution of any kind.

7.

Term of this Lease:  The term of this Lease shall begin on the Commencement Date and shall end on the End Date. 

8.

Landlord’s Obligation to Repair:  Landlord shall keep the foundation, the roof, the floor, and exterior walls (excluding the interior surface of exterior walls and all windows, doors and glass) of the Leased Premises structurally sound, unless same is damaged by Tenant and in such event the Tenant shall repair same at Tenant’s expense.  Landlord shall not be required to commence any repair until a reasonable time after written Notice from the Tenant that such repair is necessary, and thereafter shall have a reasonable time to complete such repair, which shall in no event be less than the time period provided by Florida Statutes 83.201.  Landlord has no liability to Tenant for damage or deconstruction to any real or personal property as a result of Landlord’s failure to repair, or as a result of the repair operations.  The Landlord has no other repair or maintenance obligations, but at its sole option may elect to perform other repairs or maintenance without the obligation to do so at any time thereafter.

9.

Interruption of Services:  The Landlord makes no representations or warranties as to the continuance or non-interruption of services to the Property, including but not limited to elevator (if one is present on the Property as of the Commencement Date), lighting, water, electricity, sewerage, cleaning and maintenance.  The Landlord has no liability whatsoever in the event that any of the services is not provided to the Property, including but not limited to a failure as a result of repairs, renewals, improvements, changes of service, alterations, strikes, lockouts, labor controversies, inability to obtain fuel or power, accidents, breakdowns, catastrophes, national or local emergencies, forces of nature, acts of God and other conditions beyond the reasonable control of the Landlord.  The Tenant is not entitled to any abatement of basic annual rent or additional rent for any interruption of, or failure to provide, services to the Property.

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10.

Sales or Lease Tax:  Tenant shall pay Landlord any sales, use, excise and lease taxes and all other similar charges or payments required as a result of the existence of this Lease or as a result of the payments being made to Landlord hereunder, which are imposed or levied by any governmental entity having jurisdiction over the Property, this Lease, or the payments made pursuant to this Lease.  All such tax payments are due simultaneously with the amount from which the tax arises or is based, and all such tax payments are Additional Rent.

11.

Utilities:  Tenant agrees to make all deposits and pay promptly when due all charges for separately metered utilities supplied to the Leased Premises.  Tenant shall also promptly pay all charges for maintaining any such service, including any charges for repairing mechanical systems and for installing, repairing and setting meters.

12.

Failure to Deliver Possession:  Tenant recognizes that factors beyond the reasonable control of Landlord may prevent Landlord from delivering the Leased Premises to the Tenant on the Commencement Date, and Tenant is willing to accept that risk.  In the event that the Landlord fails to deliver possession of the Leased Premises to the Tenant on the Commencement Date, the Landlord shall have no liability whatsoever to Tenant for such failure or any direct or consequential damages arising therefrom, and this Lease shall remain in full force and effect; however, there shall be no basic annual rent or additional rent due hereunder until the Landlord is able to deliver possession to the Tenant.  In the event of a delay in delivery of possession to the Tenant, the commencement date shall be the date upon which possession is actually delivered to Tenant, and such date shall be confirmed as otherwise set forth in this Lease.

13.

Environmental Matters:

a.

No Environmental Violations:  Tenant shall not at any time 1) cause, permit or suffer to occur any Environmental Violation in, on, under or above the Property or 2) permit any person or entity occupying or using the Property or any part thereof under or through Tenant to cause, permit or suffer to occur any Environmental Violation.  Tenant is responsible for cleaning up and remedying any Environmental Violation on the Leased Premises and any Environmental Violation on the Property caused by the Tenant.

b.

Tenant’s Obligations/ Financial Assurances:  If an Environmental Violation occurs or is found to exist, the Tenant is responsible for remedying the Environmental Violation and its clean up, including but not limited to all costs and expenses incident or related thereto.  If in Landlord’s reasonable judgement, the cost of remediation and clean up is likely to exceed $5,000.00 Tenant shall provide to Landlord, within ten (10) days after Landlord’s request therefor, adequate financial assurances that Tenant will effect such redemption in accordance with the applicable Environmental Laws.  Such financial assurances shall be a bond or letter of credit reasonably satisfactory to Landlord in form and substance and in an amount equal to or greater than Landlord’s reasonable estimate of the anticipated cost of remedy and clean up.

c.

Compliance with all Laws:  The Tenant is responsible for compliance with all Environmental Laws and is responsible for remedying any 

9

Environmental Violation and clean up.  If the Tenant fails to comply with all Environmental Laws or fails to remedy any Environmental Violation or fails to clean up, then Landlord shall have the right (but no obligation) to take any and all actions as Landlord shall deem necessary or advisable in order to cure such Environmental Violation and comply with all Environmental Laws, and all expenses and costs incurred by Landlord in so doing shall be Additional Rent.

d.

Notice to Landlord:  Tenant shall notify Landlord immediately after becoming aware of any Environmental Violation (or alleged Environmental Violation) or noncompliance with any of the covenants contained in this part of the Lease entitled “Environmental Matters”.

e.

Survival:  The obligations of Tenant under this part of the Lease entitled “Environmental Matters” shall survive the end of the term of this Lease.

14.

Assignment/Subletting:  This Lease may not be assigned by Tenant, and no part of the Leased Premises may be subleased by Tenant without the prior consent of Landlord, which consent shall not be unreasonably withheld.  Landlord may condition the grant of such consent upon the Tenant’s payment of all attorney’s fees and costs incurred by the Landlord thereby, upon the delivery of such information as the Landlord reasonably requests in relation thereto, and upon receipt of a guarantee and indemnification acceptable to Landlord.  If there is an assignment or subleasing without the express written consent of Landlord, Landlord may collect Basic Annual Rent and Additional Rent from the assignee, subtenant or occupant and apply the net amount collected to the amounts due under this Lease; but such collection shall not be deemed a waiver of Landlord’s right to forbid the assignment or sublease and it shall not be deemed to be the acceptance by Landlord of the assignee, subtenant or occupant as a Tenant hereunder, or as a release of performance of the obligations of Tenant.  Each time that the Tenant submits a request for the consent of the Landlord to permit the Tenant to assign or sublease, the Landlord has the option during the 90-day period following such request to end the term of this Lease of a date stated by Landlord, and Landlord has no liability to the Tenant if the Landlord enters into a lease or other agreement with the proposed subtenant or assignee prior to, upon, or after such declaration by the Landlord.

15.

Tenant’s Obligation to Repair:  Except for those items which under the terms of this Lease the Landlord is obligated to repair, the Tenant shall at all times during the term of this Lease maintain the Leased Premises in good repair and appearance and in safe operating condition, so that the entire Lease Premises is always in substantially the same condition as upon the Commencement Date of this Lease, reasonable wear excepted.  The Tenant shall perform all repairs and maintenance required of it without the necessity of Notice from the Landlord; however, the Tenant shall also complete all repairs and maintenance which the Landlord demands within 10 business days of such demand.  Notwithstanding anything to the contrary set forth in this Lease, the Tenant shall repair all damage to any part of the Property and all damage to any real or personal property owned by the Landlord, which is caused by the act or omission of the Tenant, or the officers, directors, employees, invitees or agents of the Tenant.  Tenant shall provide written Notice to Landlord of all repairs made by Tenant.  The Tenant shall at all times maintain an air conditioning services agreement in form and 

10

substance acceptable to Landlord with a company acceptable to Landlord for the repair and maintenance of all components of the air conditioning systems in the Leased Premises, and shall provide proof of same to Landlord annually or as often as Landlord may otherwise request.  It is the Tenant’s responsibility to perform all routine maintenance on the air conditioning systems, including filter replacements, throughout the term of this Lease. 

16.

Tenant’s Obligation to Maintain Insurance:  Tenant shall maintain all insurance required under this Lease and shall provide documentation and proof of such insurance as the Landlord may require.  Each insurance policy required under this Lease must: be upon terms and conditions reasonably acceptable to the Landlord; be issued only by a company reasonably acceptable to Landlord; be cancelable only upon at least 30 days prior written notice to the Landlord; and name the Landlord and the Landlord’s officers, directors, employees, invitees and agents as additional insureds.  The following insurance is required during the entire term of this Lease:

a.

Public Liability:  General public liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Property, in an amount not less than $1,000,000.00 for bodily injury or death to any one person, and not less than $1,000,000.00 for any one event, and not less than $1,000,000.00 for property damage, and such other amounts as are commercially reasonable, but in no event less than the amounts required pursuant to any mortgage on the Leased Premises.

b.

Workers’ Compensation:  Workers’ compensation insurance covering all persons employed in connection with any work done by or on behalf of the Tenant for which claims for death or bodily injury could be asserted against Landlord, Tenant or the Property.

c.

Casualty:  Insurance against loss or damage to any part of the Leased Premises, except those portions which the Landlord is required to maintain, by any cause including but not limited to fire, lightning, windstorms, hail, explosion, riot, civil commotion, damage from aircraft, smoke and other risks from time to time included under standard extended and additional extended coverage policies, including vandalism and malicious mischief, sprinkler, plate glass and flood insurance, in amounts not less than the actual replacement value of all insurable improvements on the Leased Premises.  Such policies shall contain replacement cost endorsements.

d.

Other:  Such other insurance as Landlord may require, which at the time is commonly obtained for properties similar to the Leased Premises in Dade, Broward or Palm Beach County, Florida.

17.

Increased Hazards:  Tenant shall not do or omit to do, suffer to be done, or keep, or suffer to be kept, anything in, upon or about the Property which will be in violation of the Landlord’s policies insuring against loss or damage by fire or other hazards, including but not limited to public liability, or which will prevent Landlord from procuring such policies from companies acceptable to Landlord, or which cause the rate of fire or other insurance on the Property or other property of Landlord to be increased beyond the minimum rate from time to time applicable thereto.

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18.

Liens:

a.

No Liens:  Tenant shall not permit any mechanic’s or other statutory or common law lien (collectively referred to as “Lien”) to be filed against the Property or against Tenant’s leasehold interest in the Leased Premises by reason of work, labor, services or materials supplied or claimed to have been supplied to Tenant or anyone holding the Leased Premises though or under Tenant.  If any such Lien shall be filed against the Property, Tenant shall, within ten (10) days after notice of the filing thereof, cause it to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise.

b.

Interests of Landlord are not Subject to Liens:  Pursuant to Florida Statutes 713.10, the interests of the Landlord in the Property shall not be subject to liens for improvements made by the Tenant.  The Tenant shall notify any contractor making any improvements of this provision.

c.

Liens on Property of Tenant:  Within 30 days of bringing an item of personal property onto the Leased Premises, the Tenant shall provide the Landlord with written Notice if such property was subject to a lien prior to bringing it onto the Leased Premises.

19.

Nonliability of Landlord:

a.

Present Landlord Only:  In the event of any sale or transfer of the Leased Premises by the Landlord, including any transfer by operation of law, the Landlord and in case of any subsequent transfers or conveyances the then transferor or grantor, shall be automatically freed and relieved from and after the date of such transfer or conveyance.

b.

Successors and Assigns:  The Provisions of this Lease shall be binding on Landlord, and its successors and assigns, only during and in respect of their respective successive periods of ownership of the Property.  From and after the sale of the Property the Landlord has no liability whatsoever thereafter under the Provisions of this Lease.

c.

Limitations on Liability:  Notwithstanding any other statements in this Lease, neither Landlord nor any of its officers, directors, agents, trustees, or employees shall in any manner, or to any extent, be liable to Tenant or any other person or entity.

i.

For any loss, damage or injury to person or property caused by stoppage, failure, malfunction or other defect of or in utilities, or any other aspect or facility of the Property, including but not limited to leakage, overflow or backing up of or from the roof or plumbing, heating, air conditioning, gas lines, water mains, sewers or other drainage facilities.

ii.

For loss, damage or injury to person or property resulting from accidents, explosions, leaks or other causes attributable to Tenant’s use of the Property or arising in or about the Property.

iii.

For injury or death to any person, loss, damage, or injury to any property occasioned by or through the acts or omissions of persons or entities other than the Landlord, and the Landlord shall be liable for such loss, damage, injury or death to person or property only if it results from the gross negligence of the Landlord.

iv.

For injury or death to any person, loss, damage, or injury to any property as a result of the forces of nature.

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v.

For damage, theft, or destruction of or to the fixtures and personal property of Tenant or others in and about the Property, regardless of the cause of such damage.  All property kept or stored on the Property is so kept or stored at the risk of Tenant.

20.

Limitation on Recovery against Landlord:  If Landlord shall fail to perform according to the Provisions of this Lease and Tenant shall recover a money judgement against Landlord thereby, the judgement shall be satisfied only out of the proceeds of sale received upon execution of the judgement and levied against the interest of Landlord in the Property, or out of the consideration received by Landlord from the sale or other disposition of all or any part or Landlord’s interest in the Property, and Landlord shall not be liable for any deficiency.  No other property or assets of the Landlord shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies herein, or for the Tenant’s collection of any debt, claim, judgement or other judicial process requiring the payment of money by the Landlord to the Tenant.

21.

Landlord’s Right to Assign, etc.:  The Landlord has the unlimited right to assign, mortgage, convey, hypothecate, transfer, and sell its right, title and interest in this Lease and in the Property.  The term “Landlord” shall refer only to the person or entity holding the rights of the Landlord under this Lease at any given time, and shall not necessarily refer to the actual person or entity named in the Specific Lease Provisions.

22.

Indemnification:  Tenant shall pay, protect, indemnify, save and hold harmless Landlord from and against any and all liabilities, losses, damages (including punitive damages), penalties, costs, causes of action, suits, claims, demands, or judgements of any nature whatsoever, arising from: the violation of any law, statute, rule, regulation, or ordinance by the Tenant or the Tenant’s officers, directors, agents or employees; any matter pertaining to the use, non-use, occupancy, operation, condition, design, construction, maintenance, repair or restoration of the Property or property adjoining the Property; any casualty, injury, death, or damage in any manner arising from or related to the Property or the Tenant’s use thereof, whether or not Landlord has or should have knowledge or notice of any defect or condition causing or contributing to said casualty, injury, death or damage; any violation of the Americans with Disabilities Act, Title III of the ADA 42 USC §12181, et. seq., and all regulations issued thereupon; and any breach by Tenant of any of the Provisions of This Lease or any contract or agreement to which Tenant is a party.  In case of any action or proceeding against Landlord, Tenant shall upon Notice from Landlord resist or defend such action or proceeding by counsel reasonably satisfactory to Landlord, and Landlord will cooperate and assist in the defense of such action or proceeding if reasonably requested so to do by Tenant.  The obligations of Tenant under this part of the Lease entitled “Indemnification” shall survive the end of the term of this Lease.

23.

Subordination:  This Lease and all rights of Tenant are, and shall be, subject and subordinate to any and all mortgages which are presently, or may hereafter, be placed on the Property by the Landlord, and to all renewals, modifications, 

13

consolidations, replacements and extensions thereof.  Tenant covenants and agrees that this Lease shall not be a lien against the Property with respect to any mortgage that is presently or may hereafter be placed on the Property.  Tenant agrees to execute within 5 days of demand therefor any instruments, without cost, which may be deemed necessary or desirable by Landlord, to further effect the subordination of this Lease to any such mortgage or mortgages.  Upon request by the holder of any mortgage, the Tenant shall execute and record such documents as may be required to subordinate any mortgage to this Lease.

24.

Right of Landlord to Perform for Tenant:  The Landlord shall have the right, but not the duty, to discharge any of the Tenant’s obligations under the Provisions of this Lease which the Tenant fails or refuses to timely discharge and the cost thereof shall be Additional Rent.  This remedy is in addition to such other remedies Landlord has under this Lease.

25.

Right of Entry:  Landlord has the right but not the obligation to enter into and upon the Property, and to conduct any tests deemed necessary by the Landlord, during normal business hours, for the purpose of examining the Property or making repairs or alterations therein as may be necessary for the safety and preservation of the Property, or to determine whether Tenant is in compliance with the Provisions of this Lease.  The Tenant shall provide the Landlord any information regarding the use of the Property (including but not limited to all information regarding Environmental Violations and Hazardous Substances) reasonably requested by Landlord.  The Landlord has the right but not the obligation to enter the Leased Premises at any time in the event of an emergency.  No entry by the Landlord shall be deemed to be a constructive or actual eviction and there shall be no abatement of Basic Annual Rent or Additional Rent by reason of any such entry or work in the Property by the Landlord.

26.

Surrender of Leased Premises:  At the end of the term of this Lease, Tenant shall leave the Leased Premises in as clean and as good condition as at the Commencement Date, reasonable wear and tear excepted, and shall remove all of Tenant’s personal property therefrom.  If Tenant leaves any property in or about the Leased Premises, Landlord may without Notice to Tenant either a) dispose of it and charge Tenant the cost of disposal; or b) keep such property as abandoned property without any liability whatsoever to the Tenant.  The Tenant hereby waived all rights which may be provided under Florida Statutes for the treatment of abandon property.

27.

Signs:  Tenant shall not display any sign, picture, advertisement, awning, merchandise or notice on any part of the Property except as shall conform to rules and regulations specified by Landlord.  If Tenant shall fail to comply with the provisions of this paragraph, Landlord has the right, in addition to all other remedies granted to Landlord herein, to cause the immediate removal of such things at the cost of Tenant, which cost shall be Additional Rent.

28.

Continuous Operation of Business:  Tenant shall throughout the term hereof maintain the operation of its business at the Leased Premises.

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29.

Compliance with all Laws, etc.:  Tenant shall comply with, and shall at its expense cause the Leased Premises to comply with, the provisions of all recorded covenants, conditions and restrictions in any way touching or affecting the Property including but not limited to all building, zoning, fire and other governmental laws, statutes, ordinances, and regulations (including any amendments thereto after the execution of this Lease) applicable to the Property; and all requirements of the carriers of insurance covering any portion of the Property.  Tenant has determined that all parts of the Property comply with all applicable statutes, laws, ordinances, regulations, rules and orders of every kind and nature now in effect relating to or affecting any part of the Property, and has not relied upon the representations, if any, of the Landlord in making such determination.  In the event that any present or future laws, regulations, statutes or ordinances require any modifications whatsoever to the Leased Premises, the Tenant shall make such modifications at its own expense and only with the approval of the Landlord.

30.

Compliance with ADA:  The Tenant has examined the Property and the Landlord’s Work if the Landlord has agreed to do any, is familiar with the requirements of Title III of ADA, 42 USC §12181 et. seq., the regulations pertaining to it including those found at 28 CFR Part 36, and the ADA Title III Technical Assistance Manual issued by the United States Department of Justice (collectively the “ADA”), and hereby warrants and represents to the Landlord that the Property both at the time of the execution of this Lease and after the Landlord’s Work, if any, and the Tenant’s use of the Property, is in compliance with the ADA.  Any alterations or additions to any part of the Leased Premises required as a result of the ADA, or required as a result of the Tenant’s use of the Leased Premises because of the ADA, shall be made only with the approval of the Landlord and at the sole cost and expense of the Tenant.  The Tenant is responsible for all costs associated with compliance with the ADA, including but not limited to the costs of any changes to the Leased Premises or otherwise required as a result of the ADA.

31.

Changes by Landlord:  Nothing herein shall be construed to be a guaranty of continuance of light or air over or into the Property or any property adjoining the Property, or a guaranty to preserve any view from any part of the Property, or a guaranty that access to and from the Property will remain as it is at the Commencement Date, or a guaranty that the Property will be in any given condition at any time during the term of this Lease.  The Landlord reserves the absolute right to change any part of the Building or surrounding areas in any manner deemed acceptable to Landlord.  The Landlord has the option, upon a single payment or credit to the Tenant of twice the amount of the then current Monthly Installment of Basic Annual Rent, to relocate the Tenant to any other space in the Building which is of comparable size to that of the Leased Premises.  In the event the Landlord exercises the foregoing option, the Tenant shall surrender, upon the date stated in the Notice to the Tenant of the Landlord’s exercise of this option, the Leased Premises in the condition otherwise required at the end of the term of this Lease; and thereafter the Leased Premises shall refer to the space to which the Tenant is relocated.  If the space to which the Leased Premises is relocated is larger than the original Leased Premises, there 

15

shall be no increase in the numerator of the fraction used in the calculation of the Tenant’s Proportionate Share.

32.

Damage to the Property:  If the Property is damaged by fire or other casualty, this Lease shall remain in effect if the Landlord determines that it is in its best interests to restore the Property, and in such event the Landlord shall substantially restore the Property to its condition immediately preceding the damage, unless the damage was caused by the Tenant, or the officers, directors, employees, agents or invitees of the Tenant, and in the Tenant at its expense shall immediately restore the Property to its condition immediately preceding the damage.  The Basic Annual Rent shall be abated for so much of the Leased Premises as may be untenable during the period of repair and restoration, unless the damage was caused by the act or omission of the Tenant or the officers, directors, employees, agent or invitees of the Tenant and then there shall be no abatement.  The Landlord has the option to end the term of this Lease at a date stated in written Notice to the Tenant if in the reasonable judgement of the Landlord the Property cannot be restored with the available insurance proceeds, or if in the reasonable judgement of the Landlord it is not financially beneficial to the Landlord to restore the Property.  Landlord’s only obligation to repair or restore hereunder shall be limited to a basic building and the replacement of any interior work which may have originally been installed at Landlord’s cost.  The obligations of the Tenant to restore and repair the Property as set forth in this part of the Lease entitled “Damage to the Property” shall survive the end of the term of this Lease.

33.

Condemnation and Eminent Domain:

a.

Taking:  If in the reasonable opinion of the Landlord a portion of the Property, materially affecting Tenant’s use thereof, shall be acquired or condemned by right of eminent domain or otherwise for any public or quasi-public use or purpose (herein collectively “Condemnation”), then Landlord, as its election, may end the term of this Lease by giving Notice of same to Tenant of its election.

b.

Damages:  Landlord reserves to itself, and Tenant irrevocably assigns to Landlord, all rights to damages accruing on account of any Condemnation for which damages are payable.  Landlord does not reserve to itself, and Tenant does not assign to Landlord, any damages payable for trade fixtures installed by Tenant at its own cost and expense and which are not part of the realty.

34.

Defaults:  The following are defaults under this Lease:

a

Failure to Pay:  If Tenant fails to timely pay any amount due under the Provisions of this Lease;

b.

Failure to Perform:  If Tenant shall fail to timely perform any of the Tenant’s obligations under the Provisions of this Lease;

c.

Failure to Adhere to Prohibition:  If Tenant shall fail to abide by any of the prohibitions or restrictions in the Provisions of this Lease;

d.

Execution, etc.:  If any person or entity shall levy upon, take, or attempt to take the Tenant’s leasehold interest or any part thereof upon execution, attachment or other process of law or if Tenant shall make a general 

16

assignment for the benefit of its creditors or if a proceeding is filed against Tenant seeking any such relief;

e.

Desertion:  If the Leased Premises shall be deserted, vacated, abandoned, or business operations shall not be conducted therein for a period of 10 or more consecutive business days, or for more than 30 days during any calendar year;

f.

Succession:  If this Lease or any interest therein shall by operation of law devolve upon or pass to any person or entity other than Tenant;

g.

Trustee:  If a trustee, receiver or liquidator shall be appointed for Tenant or a substantial part of its property; or

h.

Encumbrance:  If Tenant shall mortgage, assign or otherwise encumber its leasehold interest without written consent of Landlord.

35.

Landlord’s Remedies in Case of Default:  All of the rights and remedies of the Landlord set forth in this part of the Lease entitled “Landlord’s Remedies in Case of Default” shall survive the end of the term of this Lease.  If the Tenant defaults, the Landlord may end the term of this Lease and Tenant will thereupon surrender the Leased Premises to the Landlord.  In addition to the right to end the term of this Lease, the Landlord is also entitled to one or more or all of the following remedies and rights upon default by the Tenant:

a.

All Rights and Remedies Available:  The Landlord may pursue all rights and remedies afforded under the Law of the State of Florida;

b.

Take Possession:  The Landlord may immediately, or at any time thereafter, re-enter and resume possession of the Leased Premises and remove all persons and property therefrom either by summary dispossession proceedings, or by force or otherwise, without being liable for any damages therefor.  No re-entry by the Landlord shall be deemed an acceptance of surrender of this Lease;

c.

Relet:  The Landlord may relet the whole or any part of the Leased Premises for a period equal to, or greater, or less than the remainder of the then term of this Lease, at such rental and upon such terms and concessions as the Landlord shall deem reasonable, to any person which it may deem suitable and satisfactory and for any use and purpose which it may deem appropriate.  In no event shall the Landlord be liable in any respect for failure to relet the Leased Premises, or in the event of such reletting, for failure to collect the rent thereunder.  Any sums or other consideration received by the Landlord on a reletting in excess of the Basic Annual Rent and Additional Rent provided for in this Lease shall belong to the Landlord.

d.

Recovery:  If the term of this Lease is ended as a result of default by the Tenant, whether or not the Leased Premises shall be relet, Tenant shall pay to the Landlord upon demand the following amounts:

i

Expenses:  All expenses, including reasonable attorney’s fees, incurred by the Landlord in recovering possession of the Leased Premises;

ii.

Care of Leased Premises:  All reasonable costs for the care of the Leased Premises while vacant;

iii.

Reletting:  All expenses incurred by the Landlord in connection with the reletting or attempted reletting of the Leased Premises or 

17

any part thereof, including broker’s commissions, advertising expenses, and the cost of repairing, renovating or remodeling the Leased Premises;

iv.

Rent:  All Basic Annual Rent and Additional Rent, and other charges required to be paid by the Tenant under this Lease, less the rent, if any, collected by the Landlord on reletting the Leased Premises which amount shall be due and payable by the Tenant to the Landlord on the dates on which such Basic Annual Rent and Additional Rent and other charges would have become due and payable had the term of this Lease not been ended.

e.

Separate Suits:  Separate actions may be instituted by the Landlord against the Tenant from time to time for the recovery of damages then accrued, and the Landlord need not wait until the end of the term of this Lease to file such action(s).  Neither the institution of suit nor the entering of judgement therein shall bar the Landlord from bringing a subsequent suit.  Forbearance on the part of the Landlord in the institution of any suit or entry of judgement shall in no way serve rights it may have to claim a merger of such subsequent action by Landlord.  The Tenant hereby waives any rights it may have to claim a merger of such subsequent action in any previous suit or in the judgement entered therein.  Claims for Basic Annual Rent and Additional Rent may be regarded by the Landlord, if it so elects, as separate claims capable of being assigned.

f.

Landlord’s Option:  The Landlord, at its election, which shall be exercised by the service of a written Notice of the Tenant at any time, may collect from the Tenant and the Tenant shall pay in lieu of the sums otherwise becoming due under the Provisions of this Lease after the service of such Notice, an amount equal to the total of the Basic Annual Rent and Additional Rent due under this Lease to the End Date, using the then current amount of the Tenant’s Proportionate Share of the Excess over Base Taxes, assuming that the CPI will increase at the rate of 5% per year, and discounting to present value at a rate of 6%.  The Tenant shall be obligated to pay the foregoing amount, together with the other costs and expenses incurred by the Landlord as a result of the default by the Tenant.

36.

Additional Remedy of Landlord:  Notwithstanding any other part of this Lease, if Tenant shall fail to timely make any payment due under the Provisions of this Lease, or if Tenant shall otherwise fail to timely perform under the Provisions of this Lease, then without demand, and without ending the term of this Leases, Landlord may institute an action or actions against the Tenant from time to time to recover any of the aforesaid sums, or to compel performance, which prior to the final judgement in any such action, suit or proceeding shall then have become due or payable.  Neither the institution of such actions nor entering of judgement therein shall end the term of this Lease, nor shall it bar the Landlord from bringing subsequent actions.  The Tenant hereby expressly waives any right to claim a merger of such subsequent actions in any previous action or in judgements entered therein.

37.

Landlord’s Right to Injunctive and Other Relief:  In the event of a breach or threatened breach by Tenant of any of the Provisions of this Lease, Landlord 

18

shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if re-entry, summary proceedings and other remedies were not herein provided for.  Mention in this Lease of any particular remedy shall not preclude Landlord from any other remedy, in law or in equity.  Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in event of Landlord obtaining possession of Leased Premises, by reason of default by Tenant under this Lease, or otherwise.

38.

Late Payment Charge: Your rental checks are due on the first of the month for the current month. If the Tenant shall fail to timely pay the Monthly Rent or Additional Rent, the Tenant shall owe to the Landlord and shall pay upon demand the sum of $100 (“late payment charge”) or the maximum lawful charge for each payment which was due and not timely paid. There will be a 10-day grace period from the due date before a late charge is assessed.   The late payment charge is not a penalty, but is the agreed upon liquidated sum that represents the cost to the Landlord as a result of the late payment.  The Landlord’s demand for, and acceptance of, the late payment charge shall not constitute a waiver of the Landlord’s other rights and remedies as provided in this Lease.

39.

Interest on Unpaid Amounts:  All amounts due under this Lease which are not timely paid shall bear interest at the maximum lawful rate, or eighteen percent per annum, whichever is less, from the time when the amount became due until the amount is paid.

40.

Cure Period:

a.

Monetary Defaults:  There is a three (3) day grace period for the making of any payment.  There is no further right to cure, and there is no additional grace period, for the failure to timely make payments.  Notwithstanding the existence of the grace period, the Tenant is still obligated to pay the late payment charge provided for in this Lease.

b.

Non-monetary Defaults:  If Tenant defaults on any of the Provisions of this Lease, except for the obligation to make any payments of money to the Landlord, the Tenant shall cure such default within five (5) days from the date on which Landlord gives Tenant Notice of Default, or, if such default cannot be reasonably cured within such five (5) day period, the Tenant shall promptly proceed in good faith to cure such default and shall continuously and diligently work toward the cure of the default, and shall complete the cure within a reasonable time.

41.

Miscellaneous:

a.

Rules and Regulations: Tenant shall comply with the Rules and Regulations issued from time to time by the Landlord regarding the Property.  The failure to comply with such Rules and Regulations constitutes a default under this Lease.  A copy of the present Rules and Regulations has been received by the Tenant.  The Landlord has the absolute right to change the Rules and Regulations as often as the Landlord deems necessary without Notice to the Tenant and the Tenant shall abide by the changed Rules and Regulations at all times.

19

b.

All Defaults are Material and Significant: Tenant is bound to perform according to the Provisions of this Lease, and the failure to do so shall in each instance constitute a material breach of this Lease by Tenant.

c.

Non-Waiver:  The failure of Landlord to insist upon a strict performance by Tenant of any of Tenant’s obligations under the Provisions of this Lease, or the Landlord’s failure to exercise any option herein contained, is not a waiver or a relinquishment for the future of any such option or obligation.  The receipt by Landlord of Basic Annual Rent or Additional Rent, with the knowledge of Tenant’s default, shall not be deemed a waiver of such default.  No waiver by the Landlord of any Provisions of this Lease shall have been made unless expresses in writing and signed by the Landlord.

d.

Attorney’s Fees:  The prevailing party in any litigation arising out of or related to this Lease in entitled to the recovery of its reasonable attorney’s fees and costs incurred in such litigation, including but not limited to any expert witness fees.  Litigation shall include trial and any appeals.  Tenant shall pay as Additional Rent any attorney’s fees incurred by Landlord as a result of any default by Tenant, whether or not suit is brought.

e.

Severability:  The Provisions of this Lease are severable.  If any part of this Lease is adjudged to be invalid or unenforceable by a court of competent jurisdiction or by operation of any applicable law, it shall not affect the validity of any other part of this Lease, and the remainder of this Lease shall remain in full force and effect.

f.

Entire Agreement:  The entire agreement of the parties with respect to the subject matter hereof is set forth in this Lease.  Neither party is relying upon any oral agreements, warranties, nor representations not set forth specifically in this Lease.  This Lease may be cancelled or amended only by an agreement in writing signed by all parties which signed this Lease.

g.

Captions:  The captions contained in this Lease are included for convenience only and shall not limit or affect the construction or interpretation of this Lease.

h.

Recording:  The Landlord has the right to record a short form of this Lease and the Tenant agrees to execute a short form setting forth such provisions hereof as the Landlord deems necessary within 5 days of request therefor by Landlord.  The Tenant shall not under any circumstances record any portion of this Lease.

i.

Brokers:  Tenant represents and warrants to the Landlord that no broker or agent, other then Paul Adams, from Merin-Hunter Codman negotiated or was instrumental in negotiation or consummation of this Lease.   Tenant agrees to indemnify Landlord against any other loss, expense, cost or liability incurred as a result of a claim by any other broker or finder claiming through Tenant and this indemnification shall survive the end of the term of this Lease.

j.

Corporate Authority:  The persons signing this Lease each hereby represent and warrant that i) the execution, delivery and performance of the Provisions of this Lease have been duly and effectively authorized by the officers, directors and shareholders of the Tenant, if Tenant is a corporation and ii) the Provisions of this Lease are binding between Landlord and Tenant upon the execution of this Lease.

20

k.

Estoppel Certificate:  Within ten (10) days after request therefor by Landlord, Tenant shall deliver, in recordable form, a certificate to any proposed mortgagee or purchaser, or to Landlord, together with a true and correct copy of this Lease, certifying such facts as shall be reasonably requested.  Tenant’s failure to timely deliver the above-described certificate shall constitute Tenant’s agreement that all matters set forth in such certificate are true as stated therein.

l.

Accord and Satisfaction:  No receipt and retention by Landlord of any payment tendered by Tenant in connection with this Lease will give rise to or support or constitute an accord and satisfaction, notwithstanding any accompanying statement, instruction or other assertion to the contrary (whether by notation on a check or in a transmittal letter or otherwise), unless Landlord expressly agrees to an accord and satisfaction in a separate writing duly executed by the Landlord.

m.

Successors:  this Lease is binding on Landlord and Tenant and upon their respective permitted successors or assigns.

n.

Law:  This Lease shall be construed and enforced only in accordance with the laws of the State of Florida.  Venue for any litigation hereunder shall be in the county in which the Property is located.

o.

Radon Gas Notification:  In accordance with the requirements of Florida Statutes, the following notice is hereby given:  RADON GAS: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time.  Levels of radon that exceed federal and state guidelines have been found in Buildings in Florida.  Additional information regarding radon and radon testing may be obtained from your county public health unit.

					
	Landlord:

	     

	 
	Tenant: 

	 
	 
	 
	 
	 

	Wellington Land Development, LLC

	 
	 
	The Quantum Group, Inc.

	  

	 
	 
	 

	  

	 
	 
	 

	By: 

	                                                         

	 
	By: 

	                                                         

	Guy A. Mancini

	 
	 
	 

	As Managing Member

	 
	Title:

	 

	  

	 
	 
	 

	 
	 
	 
	 

	  

	 
	 
	 

	Witnesses:

	 
	 
	Witnesses:

	   

	 
	 
	 

	  

	 
	 
	 

	1 __________________________________________

	 
	 
	1 _________________________________________

	  

	 
	 
	 

	  

	 
	 
	 

	2 __________________________________________

	 
	 
	2 _________________________________________

21EXHIBIT 10.15

EXHIBIT 10.15

PLACEMENT AGENT AGREEMENT

Dated as of August 29, 2006

Newbridge Securities Corporation

1451 West Cypress Creek Road, Suite 204

Fort Lauderdale, FL 33309

Gentlemen:

1.

Offering.  

A.

The Quantum Group, Inc., a Nevada corporation (collectively with its subsidiaries, the “Company”), hereby engages Newbridge Securities Corporation (“Newbridge”) as “Placement Agent” to act as its exclusive placement agent in connection with the issuance and sale by the Company (the “Offering”) of up to $3,000,000 of up to 60 Units, at $50,000 per Unit, payable upon subscription (“Maximum Offering”) each Unit consisting of a $50,000 eight percent (8%) convertible bridge notes (the “Bridge Notes”) and a certain number of common stock shares of the Company which number is equal to the principal amount of the Bridge Notes divided by $0.33 (or 151,515 common stock shares per Unit) (the “Bridge Shares”). The Placement Agent is hereby authorized to engage, at its option, the services of other broker-dealers who are members of the National Association of Securities Dealers, Inc. (“NASD”) to assist it in soliciting subscribers and to remit to such broker-dealers the commissions payable to the Placement Agent hereunder as it shall determine.  The Company and the Placement Agent have the option to increase the Offering by up to an additional 10 Units, or $500,000, on a “best efforts” basis.

B.

The Offering is subject to (i) the terms and conditions set forth in the Company’s Confidential Private Offering Memorandum dated as of August 29, 2006 (such memorandum with all amendments and exhibits thereto (the “Memorandum”)).  The Offering is also subject to a subscription and registration rights agreement and questionnaire and a security agreement, which are attached as Exhibits to the Memorandum (collectively, the “Subscription Agreements”) (the Subscription Agreements and the Memorandum are collectively referred to as the “Offering Documents”). The Company shall issue and sell to Placement Agent or its designee(s), for nominal consideration, a warrant for each $50,000 of Bridge Notes principal sold in this Offering (the “Placement Agent Warrant”).

The Common Stock, the Bridge Notes, the Bridge Shares, the Placement Agent Warrants and the Common Stock underlying the Placement Agent Warrants in the Placement Agent Warrants are hereinafter sometimes collectively referred to as the “Securities.”  

The Common Stock and Warrants will be offered to investors (“Purchasers”) without registration under the Securities Act of 1933, as amended (the “Securities Act”).  Purchasers of the Common Stock and Bridge Notes will be granted certain registration rights with respect to the Common Stock and the Bridge Shares as more fully set forth in the Subscription Agreements. The Placement Agent will be granted certain registration rights with respect to the Placement Agent Warrant and the Common Stock underlying the Placement Agent Warrant on terms no less favorable than those offered to any Purchaser.

C.

The Units will be offered by the Placement Agent on a “best efforts” and a “best efforts” basis.  The Company will issue the certificates representing the Common Stock and Bridge Notes at one or more closings (the “Closing”) after subscriptions have been received and accepted by the Company and when funds from investors have cleared the banking system in the normal course of business.  

D.

The Offering shall terminate on the earliest of (i) September 29, 2006 or (ii) completion of the Maximum Offering, unless the Company and Placement Agent extend the Offering at their sole discretion by two (2) additional thirty (30) day periods without notice to the investors (the “Offering Period”).  With respect to any subscriptions that are received by the Placement Agent or accepted by the Company subsequent to the Offering Period, all funds received by investors will be returned thereto, without interest thereon or deduction therefrom.  The Company and Placement Agent reserve the right to reject any and all subscription agreements.

2.

Information.

A.

The Common Stock and Bridge Notes shall have the terms set forth in and shall be offered by the Company by means of the Offering Documents. Payment for the Units shall be made by check, money order or wire transfer as more fully described in the Subscription Agreement.  The minimum purchase by any Purchaser shall be $50,000 per Unit sold in the Offering, unless subscriptions for lesser amounts are accepted at the discretion of the Company and the Placement Agent.  The Placement Agent and the Company agree that the Units will be offered solely to “accredited investors” within the meaning of Rule 501 of Regulation D (“Accredited Investors”) promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act and Rule 506 of Regulation D under the Securities Act.  

B.

All funds received from subscriptions arranged will be promptly transmitted to the escrow account maintained at U.S. Bank National Association and designated as “U.S. Bank National Association/The Quantum Group, Inc. - Escrow Account.”  In the event that a Closing occurs, the funds received in respect of the Units closed on will be forwarded to the Company, against delivery of the appropriate amount of the Common Stock and Warrants, net of (i) the placement agent commission equal to cash in an amount equal to ten percent (10%) of the gross proceeds of the Units sold in the Offering, (ii) a non-accountable expense allowance equal to three percent (3%) of the gross proceeds in the Offering, (iii) a warrant for each $50,000 of Bridge Note principal sold in this Offering (the “Placement Agent Warrant”). Each Placement Agent Warrant 

2

shall be exercisable for 5 years from the last closing to purchase 15,151 shares of common stock at $0.33 per share, and (iv) any out-of-pocket costs and expenses paid or to be paid by the Placement Agent including, but not limited to legal fees, which legal fees shall not exceed $25,000 and travel expenses, provided that any travel expenses in excess of $1,000 shall require the prior written approval of the Company.

C.

The Company and Placement Agent reserve the right to reject any subscriber, in whole or in part, in their sole reasonable discretion. Funds received by the Company from any subscriber whose subscription is rejected will be returned to such subscriber, without deduction therefrom or interest thereon, but no sooner than such funds have cleared the banking system in the normal course of business.

3.

Representations, Warranties and Covenants of Placement Agent.

The Placement Agent represents, warrants and covenants as follows:

(i)

It has the necessary power to enter into this Agreement and to consummate the transactions contemplated hereby.

(ii)

The execution and delivery by the Placement Agent of this Agreement and the consummation of the transactions contemplated herein will not result in any violation of, or be in conflict with, or constitute a default under, any agreement or instrument to which a Placement Agent is a party or by which a Placement Agent or its properties are bound, or any judgment, decree, order or, to a Placement Agent’s knowledge, any statute, rule or regulation applicable to a Placement Agent.  This Agreement constitutes the legal, valid and binding obligation of the Placement Agent, enforceable against the Placement Agent in accordance with its terms, except to the extent that (a) the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally, (b) the enforceability hereof is subject to general principles of equity, or (c) the indemnification provisions hereof may be held to be violative of public policy.

(iii)

The Placement Agent will deliver to each Purchaser, prior to any submission by such person of a written offer relating to the purchase of the Units, a copy of the Offering Documents, as they may have been most recently amended or supplemented by the Company.

(iv)

Upon receipt of an executed Subscription Agreement, the Placement Agent will promptly forward copies of the subscription documents to the Company.

(v)

The Placement Agent will not deliver the Offering Documents to any person they do not reasonably believe to be an Accredited Investor or to any person in a state where it does not reasonably believe that the Offering is exempt from the applicable state “Blue Sky” laws.

3

(vi)

The Placement Agent will not intentionally take any action which it reasonably believes would cause the Offering to violate the provisions of the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the respective rules and regulations promulgated thereunder (the “Rules and Regulations”).

(vii)

The Placement Agent shall have no obligation to insure that (a) any check, note, draft or other means of payment for the Units will be honored, paid or enforceable against the subscriber in accordance with its terms; or (b) subject to the performance of the Placement Agent’s obligations and the accuracy of the Placement Agent’s representations and warranties hereunder, (i) the Offering is exempt from the registration requirements of the Securities Act or any applicable state “Blue Sky” law; or (ii) any prospective Purchaser is an Accredited Investor; provided that Placement Agent will not deliver the Offering Documents to any person they do not reasonably believe to be an Accredited Investor.

(viii)

The Placement Agent is a member in good standing of the NASD and is a broker-dealer registered as such under the Exchange Act and under the securities laws of the states in which the Securities will be offered or sold by the Placement Agent, unless an exemption for such state registration is available to the Placement Agent.  The Placement Agent is in compliance with all material rules and regulations applicable to the Placement Agent generally and to the Placement Agent’s participation in the Offering.

4.

Representations and Warranties of the Company.

The Company represents and warrants as follows:

(i)

The execution, delivery and performance of each of this Agreement, the Subscription Agreements and the Escrow Agreement (as defined below) has been duly and validly authorized by the Company and is, or with respect to the Subscription Agreements, will be, a valid and binding obligation of the Company, enforceable in accordance with its respective terms, except to the extent that (a) the enforceability hereof or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally, (b) the enforceability hereof or thereof is subject to general principles of equity; or (c) the indemnification provisions hereof or thereof may be held to be violative of public policy.  

(ii)

The issuance, sale and delivery by the Company of the Securities have been or will be prior to the Closing duly authorized by all requisite corporate action of the Company.  The Bridge Shares and the Placement Agent Shares will, prior to the Closing, be duly reserved for issuance upon conversion of the Bridge Notes and exercise of the Placement Agent Units, respectively.

(iii)

Except as set forth in the Offering Documents, all issued and outstanding securities of the Company have been duly authorized and validly issued, fully paid and non-assessable and were issued in compliance with all applicable federal 

4

and state securities laws; the holders thereof have no rights of rescission or preemptive rights with respect thereto and are not subject to personal liability solely by reason of being security holders; and none of such securities was issued in violation of the preemptive rights of any holders of any security of the Company.  The Company has 170,000,000 shares of authorized Common Stock,  28,126,169 shares of which are issued and outstanding as of the date hereof and 30,000,000 shares of authorized Preferred Stock, none of which are outstanding on the date hereof.

(iv)

Except as set forth in the Offering Documents, there are: (i) no outstanding options, warrants, rights (including conversion or preemptive rights) or agreements pursuant to which the Company is or may become obligated to issue, sell or repurchase any securities of the Company; (ii) no restrictions on the transfer of the Company’s capital stock imposed by the Company’s Certificate of Incorporation or Bylaws or any agreement to which the Company is a party, any order of any court or any governmental agency to which the Company is subject or any statute other than those imposed by relevant state and federal securities laws; (iii) no cumulative voting or preemptive rights for any of the Company’s capital stock; (iv) no registration rights under the Securities Act with respect to the Company’s capital stock; (v) no antidilution adjustment provisions or similar rights with respect to the outstanding securities of the Company will be triggered by the issuance of the Securities; (vi) no voting trusts or agreements, shareholders agreements, pledge agreements, buy-sell, rights of first offer, negotiation or refusal or proxies or similar arrangements relating to any securities of the Company to which the Company is a party; and (vii) no options or other rights to purchase securities from its shareholders granted by such shareholders.

(v)

The Common Stock, Bridge Shares and Placement Agent Shares, when issued in accordance with the terms of the Subscription Agreement, Bridge Notes, and the Placement Agent Units and the terms of this Agreement as the case may be, will be validly issued, fully-paid and non-assessable. The holders of the Securities will not be subject to personal liability under the Company’s Certificate of Incorporation or Bylaws or, any state law, solely by reason of being such holders; the Securities are not and will not be subject to the preemptive rights of any holder of any security of the Company.

(vi)

The Company has good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property necessary to conduct its business (including, without limitation, any real or personal property stated in the Offering Documents to be owned or leased by the Company), free and clear of all liens, encumbrances, claims, security interests and defects of any nature whatsoever, other than those set forth in the Offering Documents and liens for taxes not yet due and payable.  All of the leases and subleases under which the Company is the lessor or sublessor of properties or assets or under which the Company holds properties or assets as lessee or sublessee are in full force and effect, and the Company is not in default with respect to any of the terms or provisions of any of such leases or subleases, and no claim has been asserted by anyone adverse to rights of the Company as lessor, sublessor, lessee or sublessee under any of the leases or subleases mentioned above, or affecting or questioning the right of the Company to 

5

continued possession of the leased or subleased premises or assets under any such lease or sublease.

(vii)

There is no litigation or governmental proceeding pending or, to the best of the Company’s knowledge, threatened against, or involving the Company or its properties or business.  The Company is not a party to any order, writ, injunction, judgment or decree of any court.

(viii)

Each of the Company and its subsidiaries has been duly organized and is validly existing as a corporation in good standing under its respective state of incorporation.  The Company does not own or control, directly or indirectly, an interest in any other corporation, partnership, trust, joint venture or other business entity.  The Company’s subsidiaries are set forth on Schedule to this Agreement.  The Company and its subsidiaries has all requisite corporate power and authority, and all material and necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies (domestic and foreign) to conduct its businesses (and proposed business), and each the Company and its subsidiaries is doing business in compliance with all such authorizations, approvals, orders, licenses, certificates and permits and all foreign, federal, state and local laws, rules and regulations concerning the business in which it is engaged, except where failure to so comply would not have a material adverse effect on the Company or its subsidiaries (“MAE”).  The Company has all corporate power and authority to enter into this Agreement, the Subscription Agreements, the Bridge Notes, the Placement Agent Units, and Escrow Agreement and to carry out the provisions and conditions hereof and thereof and to issue, sell and deliver the Securities.  No consents, authorizations, approvals, or orders of, or registration, qualification, declaration or filing with, any federal, state or local governmental authority on the part of the Company or its subsidiaries is required in connection herewith and therewith or to issue, sell and deliver the Securities, other than registration or qualification, or taking such action to secure exemption from such registration or qualification of the Securities under applicable state, federal or foreign securities laws, which actions have been taken or will be taken prior to the Closing.  

(ix)

The Company and its subsidiaries are not in breach of, or in default under, any term or provision of any indenture, mortgage, deed of trust, lease, note, loan or credit agreement or any other agreement or instrument evidencing an obligation for borrowed money, or any other agreement or instrument to which it is a party or by which it or any of its properties may be bound.  The Company and its subsidiaries are not in violation of any provision of its charter or Bylaws or in violation of any franchise, license, permit, judgment, decree or order, or in violation of any statute, rule or regulation, except for the violation of statutes, rules or regulations would not have a MAE.  Neither the execution and delivery of this Agreement and the Subscription Agreements, nor the issuance and sale or delivery of the Securities, nor the consummation of any of the transactions contemplated herein or in the Subscription Agreements, nor the compliance by the Company or its subsidiaries with the terms and provisions hereof or thereof, has conflicted with or will conflict with, or has resulted in or will result in a breach of, any of the terms and provisions of, or has constituted or will constitute a 

6

default under, or has resulted in or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, note, loan or credit agreement or any other agreement or instrument evidencing an obligation for borrowed money, or any other agreement or instrument to which the Company and its subsidiaries may be bound or to which any of the property or assets of the Company and of its subsidiaries is subject except where such default, lien, charge or encumbrance would not have a MAE; nor will such action result in any violation of the provisions of the charter or the Bylaws of the Company or, assuming the due performance by the Placement Agent of its obligations hereunder, any statute, order, rule or regulation applicable to the Company of any court or of any foreign, federal, state or other regulatory authority or other government body having jurisdiction over the Company.

(x)

Neither the Company, its subsidiaries or their respective officers, directors, employees or stockholders has employed any broker or finder in connection with the transactions contemplated by this Agreement other than Placement Agent and there are no claims for services in the nature of a finder’s or origination fee with respect to the sale of the Securities.

(xi)

Each the Company and its subsidiaries owns or possesses, free and clear of all liens or encumbrances and rights thereto or therein by third parties, the requisite licenses or other rights to use all trademarks, service marks, copyrights, service names, trade names, patents, patent applications and licenses necessary to conduct its business (including, without limitation, any such license, patent or rights described in the Offering Documents as being owned or possessed by the Company) and there is no claim or action by any person pertaining to, or proceeding, pending or to the Company’s knowledge, threatened, which challenges the rights of the Company with respect to any trademarks, service marks, copyrights, service names, trade names, patents, patent applications and licenses used in the conduct of the Company’s business (including, without limitation, any such licenses or rights described in the Offering Documents as being owned or possessed by the Company); of the Company’s current products, services or processes do not infringe or will not infringe on the patents currently held by any third party.

(xii)

Each the Company and its subsidiaries is not under any obligation to pay royalties or fees of any kind whatsoever to any third party with respect to any trademarks, service marks, copyrights, service names, trade names, patents, patent applications, licenses or technology it has developed, uses, employs or intends to use or employ.

(xiii)

Subject to the performance by the Placement Agent of its obligations hereunder, and the accuracy of the representations and warranties made by the respective investors in the Subscription Agreements, the Offering Documents and the offer and sale of the Securities comply, and will continue to comply, through the Offering Period with the requirements of Rule 506 of Regulation D promulgated by the Commission pursuant to the Securities Act and any other applicable federal and state 

7

laws, rules, regulations and executive orders.  Neither the Offering Documents nor any amendment or supplement thereto, nor any other documents prepared by the Company in connection with the Offering contain 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, in light of the circumstances under which they were made, not misleading.  All statements of material facts in the Offering Documents are true and correct as of the date of the Offering Documents and will be true and correct in all material respects on the date of each Closing except with respect to the number of shares of Common Stock outstanding, which may change between the date hereof and the date of each Closing due to the conversion of outstanding securities as described in the Offering Documents.  If at any time prior to the completion of the Offering or other termination of this Agreement any event shall occur as a result of which it might, in the Company’s opinion, become necessary to amend or supplement the Offering Documents so that they do not include any untrue statement of any material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then existing, not misleading, the Company will promptly notify Placement Agent and will supply Placement Agent with amendments or supplements correcting such statement or omission.

(xiv)

All taxes which are due and payable from the Company and its subsidiaries have been paid in full or appropriate extensions of such payment have been obtained and the Company does not have any tax deficiency or claim outstanding assessed or proposed against it (except for such amounts set forth in the Offering Documents or on Schedule 4(xiv), which amounts will be paid at Closing).

(xv)

Intentionally omitted.  

(xvi)

Neither the Company, its subsidiaries and their respective officers, directors, employees or agents, nor any other person acting on behalf of the Company has, directly or indirectly, given or agreed to give any money, gift or similar benefit to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who is or may be in a position to help or hinder the business of the Company or its subsidiaries (or assist it in connection with any actual or proposed transaction) which (A) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (B) if not given in the past, might have had a MAE on the assets, business or operations of the Company as reflected in any of the financial statements contained in the Offering Documents or on Schedule 4(xvi), or (C) if not continued in the future, might adversely affect the assets, business or operations of the Company.

(xvii)

Assuming (i) the accuracy of the information provided by the respective investors in the Subscription Agreements and (ii) that Placement Agent has complied in all material respects with its obligations under this Agreement, the offer and sale of the Bridge Notes pursuant to the terms of the Offering Documents are exempt 

8

from the registration requirements of the Securities Act and the rules and regulations promulgated thereunder.

(xviii)

When the Common Stock, Bridge Shares, and the Placement Agent Shares shall have been duly delivered to the Purchasers and payment shall have been made therefore, the Purchasers shall have good and marketable title to the Common Stock, Bridge Shares and Placement Agent Shares, as the case may be, free and clear of all liens, encumbrances and claims whatsoever and the Company shall have paid all taxes, if any, in respect of the original issuance thereof.

(xix)

The Company understands that the foregoing representations and warranties shall be deemed material and to have been relied upon by Placement Agent.  No representation or warranty by the Company in this Agreement, and no written statement contained in any document, certificate or other writing delivered by the Company to Placement Agent contains any untrue statement of material fact or omits to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.

(xx)

Upon receipt of an executed Subscription Agreement, Company will promptly forward copies of the subscription documents to Placement Agent.

(xxi)

The Company will not deliver the Offering Documents to any person it does not reasonably believe to be an Accredited Investor.

(xxii)

The Company will not take any action which it reasonably believes would cause the Offering to violate the provisions of the Securities Act, Exchange Act, or the Rules and Regulations.

(xxiii)

The Company shall use all reasonable best efforts to determine (a) whether any prospective Purchaser is an Accredited Investor and (b) that any information furnished by a prospective investor is true and accurate.

(xxiv)

As of the date hereof, the Company has no contractual liability or any other liability, whether accrued, contingent, absolute, determined, indeterminable or otherwise, which was not (i) reflected or reserved against in the financial statements or (ii) incurred in the ordinary course of business, consistent with past practice since the date of its inception balance sheet.

(xxv)

Since its inception, except as disclosed in the Offering Documents, each the Company and its subsidiaries has not incurred any liabilities or obligations, direct or contingent, not consistent with its past practices, or entered into any transaction not consistent with its past practices, which is material to the business of the Company, and, since the date of the Memorandum, there has not been any change in the capital stock of, or any incurrence of funded debt by, the Company, or any issuance of options, warrants or other rights to purchase the capital stock of the Company, or any adverse change or any development involving, so far as the Company can now reasonably foresee, a prospective adverse change in the condition (financial or otherwise), net worth, results of operations, business, key personnel or properties which 

9

would be material to the business or financial condition of the Company, and the Company has not become a party to, and neither the business nor the property of the Company has become the subject of, any material litigation whether or not in the ordinary course of business.

(xxvi)

Except with respect to holders of the Units, no person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.  The Company shall grant registration rights under the Securities Act to the investors in the Offering and/or their transferees as more fully described in the Subscription Agreement between the Company and the investors.

(xxvii)

No person, firm or other business entity is a party to any agreement, contract or understanding, written or oral entitling such party to a right of first refusal with respect to offerings by the Company.

5.

Certain Covenants and Agreements of the Company.

The Company covenants and agrees at its expense and without any expense to Placement Agent as follows:

A.

To advise Placement Agent of any adverse change in the Company’s financial condition, prospects or business or of any development materially affecting the Company or rendering untrue or misleading any material statement in the Offering Documents occurring at any time prior to a Closing as soon as reasonably practicable after the Company is either informed or becomes aware thereof.

B.

To use its best efforts to cause the Securities to be qualified or registered for sale, or to obtain exemptions from such qualification or registration requirements, on terms consistent with those stated in the Offering Documents, the Security Agreement, the Bridge Notes and the Placement Agent Units under the securities laws of such jurisdictions as Placement Agent shall reasonably request, provided that such states and jurisdictions do not require the Company to qualify as a foreign corporation.  Qualification, registration and exemption charges and fees shall be at the sole cost and expense of the Company.  Company’s counsel shall perform the required “Blue Sky” services, and all reasonable expenses and disbursements of Company’s counsel relating to such “Blue Sky” matters and relating to the Offering shall be paid by the Company.

C.

To apply the net proceeds of the Offering as described in the Offering Documents or as set forth on Schedule 5(C).  

D.

To reimburse the Placement Agent for costs associated with printing the Offering Documents.

E.

To comply with the terms of the Subscription Agreements, the Security Agreement, the Bridge Notes and Placement Agent Units including, without limitation, the registration rights provisions thereof.

10

F.

To issue to Placement Agent or its designees, at the Closing, the Placement Agent Units and provide for registration by the Company of the Placement Agent Shares issuable upon the exercise thereof as set forth in the Placement Agent Warrants. 

G.

To keep available out of its authorized and designated Common Stock, solely for the purpose of issuance and exercise of the Warrants and Placement Agent Units, such number of Bridge Shares and Placement Agent Shares.

H.

Within three (3) days from the date hereof, Placement Agent shall receive a copy of a duly executed escrow agreement in the form previously delivered to you regarding the deposit of funds pending the closing(s) of the Offerings with a bank or trust company acceptable to the Placement Agent (the “Escrow Agreement”)..  

I.

There shall be satisfaction by the Placement Agent, in its sole discretion, with their ongoing due diligence of the Company.

6.

Indemnification.

The Company agrees to indemnify and hold harmless the Placement Agent, its affiliates, the directors, officers and employees of the Placement Agent and its affiliates and subagents and selected dealers, and each other person or entity, if any, controlling the Placement Agent or any of its affiliates (collectively, “Indemnified Persons”), from and against, and the Company agrees that no Indemnified Person shall have any liability to the Company or its owners, parents, affiliates, securityholders or creditors for, any losses, claims, damages, liabilities or expenses (including actions, claims or proceedings in respect thereof (collectively, “Actions”) brought by or against any person, including stockholders of the Company, and the cost of any investigation and preparation therefore and defense thereof) (collectively, “Losses”) (A) related to or arising out of any statements or omissions made in the Offering Documents or any exhibit thereto or the services, commitment or other obligations undertaken or being considered by the Placement Agent in this Agreement in connection with the sale of the Securities in the Offering (collectively, “Placement Agent’s Role”), and claims relating to any finders or origination fees, except that the indemnification shall not apply to the Losses of an Indemnified Person that are determined by a court of competent jurisdiction in a final judgment not subject to appeal to have resulted from the bad faith or gross negligence of such Indemnified Person or to Losses arising out of a claim under subsection (A) under this section as to an alleged omission from or misstatement in, the Offering Documents or any exhibit thereto if either (i) at or prior to the execution of a Subscription Agreement the copy of the Memorandum and exhibits were not sent or delivered to the subscriber or (ii) the alleged untrue statement was corrected or the omission of a material fact alleged was contained in a supplement or amendment to the Memorandum was delivered to the subscriber prior to the written acceptance of the subscriber’s Subscription Agreement by the Company.

Promptly after receipt by an Indemnified Person (each an “indemnified party”) under this Section 6 of notice of the commencement of any action, such indemnified 

11

party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6, notify in writing the indemnifying party of the commencement thereof, however, that no delay on the part of the indemnified party in notifying the indemnifying party shall relieve the indemnifying party from any obligation hereunder unless the indemnifying party is prejudiced by such delay.  In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may wish, jointly with any other indemnifying party, similarly notified, to assume the defense thereof, with counsel who shall be to the reasonable satisfaction of such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that if, in the reasonable judgment of the indemnified party, it is advisable for the indemnified party to be represented by separate counsel, the indemnified party shall have the right to employ a single counsel to represent the indemnified parties who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified parties thereof against the indemnifying party, in which event the fees and expenses of such separate counsel shall be borne by the indemnifying party.  Any such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected without the consent of such indemnifying party which consent shall not be unreasonably withheld.

If such an indemnity provided for in this Agreement is unavailable or insufficient for any Indemnified Person with respect to any Losses, then the indemnifying party, in lieu of indemnifying such Indemnified Person, will contribute to the amount paid or payable by such Indemnified Person as a result of such Losses (i) in such proportion as it is appropriate to reflect the relative benefits received by the Company on the one hand, and the Placement Agent, on the other hand, from the Transactions, or (ii) if the allocation provided by (i) above is not permitted by applicable law in such proportion as is appropriate to reflect not only the relative benefits referred to in (i) above, but also the relative fault on the Company, on the one hand, and of the Placement Agent on the other hand in connection with statements or omissions that resulted in Losses as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand, and the Placement Agent, on the other hand shall be deemed to be in the same proportion as the total proceeds from the Transactions (net of sales commissions, but before deducting other expenses) received by the Company bear to the commissions received by the Placement Agent.  The relative fault of the Company, on the one hand, and the Placement Agent, on the other hand, will be determined with reference to, among other things, whether the untrue or alleged untrue statement of material fact or the omission to state a material fact relates to the information supplied by the Company, on the one hand, and the Placement Agent, on the other hand, and their relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

12

The Company and the Placement Agent agree that it would not be just and equitable if contribution pursuant to this section were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.

THE PLACEMENT AGENT HEREBY AGREE AND THE COMPANY HEREBY AGREES, ON ITS OWN BEHALF AND ON BEHALF OF ITS SECURITYHOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF PLACEMENT AGENT’S ROLE OR THIS PLACEMENT AGENT AGREEMENT.

7.

Payment of Expenses.

Whether or not the Offering is successfully completed, the Company hereby agrees to bear all of its expenses in connection with the Offering, including, but not limited to the following: due diligence, travel, lodging, filing fees, printing and duplicating costs, advertisements, postage and mailing expenses with respect to the transmission of offering material, registrar and transfer agent fees, escrow agent fees and expenses, fees of the Company’s counsel and accountants, issue and transfer taxes, if any, “Blue Sky” counsel fees and expenses and the legal fees and expenses of Placement Agent’s counsel in an amount not to exceed $25,000 (if the Offering is not consummated).  It is agreed that the Company’s counsel shall perform the required Blue Sky legal services.  

8.

Conditions of the Closing

Provided the Offering shall have been subscribed for and funds representing such amount thereof shall have cleared, each Closing shall be held at the offices of a Placement Agent’s counsel or such other place as mutually agreed upon by the parties. The obligations of the Placement Agent hereunder shall be subject to the continuing accuracy of the representations and warranties, in all material respects, of the Company herein as of the date hereof and as of the date of the Closing as if such representations and warranties had been made on and as of such Closing; the accuracy on and as of the date of each Closing of the statements of the officers of the Company made pursuant to the provisions hereof; and the performance by the Company on and as of each Closing of its covenants and obligations hereunder and to the following further conditions:

A.

At each Closing, the Placement Agent shall receive the opinion of Arnstein & Lehr, LP, counsel to the Company, dated as of the date of the Closing, which opinion shall be in form and substance reasonably satisfactory to counsel for the Placement Agent, in previously agreed upon form and substance.

B.

At or prior to each Closing, counsel for Placement Agent shall have been furnished such documents, certificates and opinions as it may reasonably require for the purpose of enabling it to review or pass upon the matters referred to in this Agreement and the Offering Documents, or in order to evidence the accuracy, completeness or satisfaction of any of the representations, warranties or conditions herein contained.

13

C.

At and prior to each Closing, (i) there shall have been no material adverse change nor development involving a prospective change in the financial condition or operations except where such change would not have a material adverse effect or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Offering Documents; (ii) there shall have been no material transaction, not in the ordinary course of business, entered into by the Company which has not been disclosed as having taken place or being contemplated in the Offering Documents or to the Placement Agent in writing; (iii) except as otherwise disclosed in the Offering Documents or the Schedules hereto, the Company shall not be in default under any provision of any instrument relating to any outstanding indebtedness, excluding trade payables, for which a waiver or extension has not been otherwise received except where such default would not have a material adverse effect; (iv) except as set forth in the Offering Documents or in the Schedules to this Agreement, the Company shall not have issued any securities (other than those set forth in the Offering Documents or pursuant to the exercise of outstanding warrants or options) or declared or paid any dividend or made any distribution of its capital stock of any class and there shall not have been any material adverse change in the indebtedness (long or short term) or liabilities or obligations of the Company (contingent or otherwise); (v) no material amount of the assets of the Company shall have been pledged or mortgaged, except with respect to assets in the normal course of business and as indicated in the Offering Documents or in the Schedules to this Agreement; and (v) no action, suit or proceeding, at law or in equity, against the Company or affecting any of its properties or businesses shall be pending or threatened before or by any court or federal or state commission, board or other administrative agency, domestic or foreign, wherein an unfavorable decision, ruling or finding could have a material adverse effect, except as set forth in the Offering Documents or in the Schedules of this Agreement.

D.

The Offering will become qualified or be exempt from qualification under the securities laws of the several states as contemplated by Section 5(B) no later than the date of the Closing and no stop order suspending the sale of the Bridge Notes shall have been issued, and no proceedings for that purpose shall have been initiated or threatened.

E.

At each Closing, the Placement Agent shall have received a certificate of the Company signed by its chief executive officer, dated as of the date of such Closing, to the effect that the conditions set forth in subparagraph (C) above have been satisfied and that, as of the date of such Closing, the representations and warranties of the Company set forth herein are true and correct.

F.

At each Closing, the Company shall have duly executed and delivered the appropriate amount of Common Stock and Bridge Notes to the respective holders thereof.

G.

At each Closing, the Company shall duly and validly issue the Placement Agent Warrants in accordance with the terms hereof. 

14

H.

There shall be satisfaction by the Placement Agent, in its sole discretion, with its ongoing due diligence of the Company.

9.

Termination.

This Agreement shall terminate if a Closing does not take place on or before seven (7) business days following the Offering Period. In the event that the Offering is not successfully completed, then the Company shall immediately pay to Placement Agent the amount any out-of-pocket costs and expenses paid or to be paid by the Placement Agent including, but not limited to legal fees, which legal fees shall not exceed $25,000 and travel expenses, provided that any travel expenses in excess of $1,000 shall require the prior written approval of the Company..  Upon any termination of the Offering, all subscription documents and payments for the Securities not previously delivered to the Purchasers thereof, shall be returned to the respective subscribers, without interest thereon or deduction therefrom, and neither party hereto shall have any further obligation to each other, except as specifically provided herein.  

10.

Miscellaneous.

A.

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all which shall be deemed to be one and the same instrument.

B.

Any notice required or permitted to be given hereunder shall be given in writing and shall be deemed effective when deposited in the United States mail, postage prepaid, or when received if personally delivered, sent by overnight courier or faxed, addressed as follows:

To Newbridge:

Newbridge Securities Corporation

1451 West Cypress Creek Road, Suite 204

Fort Lauderdale, Florida 33309

Fax:  (954) 337-2901

Attention:  Douglas Aguililla

with a copy to:

Cozen O’Connor

1627 I Street, NW, Suite 1100

Washington, DC 20006

Fax: (202) 912-4830

Attention:  Ralph V. De Martino, Esq.

15

to the Company:

The Quantum Group, Inc. 

3420 Fairlane Farms Road, Suite C

Wellington, FL 33414

Fax:  (561) 296-3456

Attention:  Noel Guillama, President 

with a copy to:

Arnstein & Lehr LLP

200 East Las Olas Blvd., Suite 1700

Fort Lauderdale, FL 33301 

Fax:  (954) 713-7700

Attention:  Joel D. Mayersohn, Esq.

or to such other address of which written notice is given to the others.

C.

This Agreement shall be governed by and construed in all respects under the laws of the State of Florida, without reference to its conflict of laws rules or principles.  Any suit, action, proceeding or litigation arising out of or relating to this Agreement shall be brought and prosecuted in any Florida State court sitting in the County of Broward, Florida and any Federal court sitting in the Southern District of the State of Florida.  The parties hereby irrevocably and unconditionally consent to the jurisdiction of each such court or courts located within the State of Florida and to service of process by registered or certified mail, return receipt requested, or by any other manner provided by applicable law, and hereby irrevocably and unconditionally waive any right to claim that any suit, action, proceeding or litigation so commenced has been commenced in an inconvenient forum.

D.

This Agreement and the other agreements referenced herein contain the entire understanding between the parties hereto with respect to the subject Offering and may not be modified or amended except by a writing duly signed by the party against whom enforcement of the modification or amendment is sought.  The terms and conditions of any other agreement between the Company and Placement Agent are hereby terminated, and specifically the letter of intent between the Placement Agent and the Company, as well as any other any other prior agreement or understanding not set forth herein between the Company and the Placement Agent are hereby terminated, voided and made null.

E.

If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Agreement.

16

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

			
	 
	THE QUANTUM GROUP, INC.

	  

	 
	 

	  

	 
	 

	                                                            

	By:

	/s/ DONALD B. COHEN

	 
	 
	Name: Donald B. Cohen

	 
	 
	Title:    Chief Financial Officer, VP

	 
	 
	 

NEWBRIDGE SECURITIES CORPORATION

By:___________________________________

      Name:  Douglas K. Aguililla

      Title:   Director of Investment Banking

17

Schedule 4(xiv)

There are payroll taxes past due at July 31, 2006 of $93,065.82 and at August 29, 2006 of $113,307.68.

Schedule (ix)

The Company is in default of a promissory note in the principal amount of $125,000 to Maj-Britt Rosenbaum.

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