Document:

EXHIBIT
10.7

EMPLOYMENT
AGREEMENT

 

THIS
AGREEMENT is
entered into this as of April 1, 2004 (this “Agreement”) by and
between The Felton Bank (the “Bank”) and
Shore Bancshares, Inc. “Shore
Bancshares”, with
the Bank, collectively, the “Companies”) and
Thomas Evans (the “Employee”).

 

WHEREAS,
Bank is a
subsidiary of Midstate Bancorp, Inc., which has merged into Shore Bancshares
(the “Merger”);
and

 

WHEREAS, the
Employee has been employed by the Bank as President and Chief Executive Officer;
and

 

WHEREAS,
the
parties hereto desire by writing set forth the continued employment relationship
of the Companies and the Employee;

 

NOW
THEREFORE, it is
AGREED as follows:

 

1.    The
Employee is employed as the President and Chief Executive Officer of The Felton
Bank. The Employee shall render administrative and management services to the
Companies such as are customarily performed by persons situated in similar
executive capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Companies.
The Employee’s other duties shall be such as the Boards of Directors of the
Companies (the “Boards”) may from
time to time reasonably direct, including normal duties of an officer of the
Companies.

 

2.    The
Companies agree to pay the Employee during the term of this Agreement a salary
at the rate of $105,000.00 per annum, in cash not less frequently than twice
monthly or at some other reasonable frequency as other employees of the
Companies are paid. Such rate of salary, or increased rate of salary, if any, as
the case may be, shall be reviewed by the Boards, or by a committee designated
by the Boards, no less often than annually and may be increased; which increases
may not be unreasonably denied; but not decreased, in such amounts as the Boards
in their discretion may decide.

 

3.    The
Employee shall be eligible to participate in such discretionary bonuses when and
as declared by the Boards.

 

4.    (a)    The
Employee shall be entitled to participate in any plan of the Companies relating
to pension, profit sharing, or other retirement benefits and medical coverage or
reimbursement plans the Companies may adopt for the benefit of its
employees.

 

(b)    The
Employee shall be eligible to participate in any fringe benefits which may be or
become applicable to the Companies’ officers including participation in any
stock option or incentive plans adopted by the Boards, a reasonable expense
account, and any other benefits which are commensurate with the responsibilities
and functions to be performed by the Employee under this Agreement.

 

5.    The
initial term of employment under this Agreement shall be for 48 months
commencing on the date of this Agreement. Upon the expiration of the 48 month
initial term of employment, the term of employment shall automatically be
extended for another 12 month period and then for successive 12 month periods
without further action by the parties, unless either party shall have served
notice upon the other 90 days prior to the commencement of any period, of its
intention that this Agreement shall terminate at the end of the then current
term of employment.

 

6.    (a)    The
Employee shall devote his full time and best efforts to the performance of his
employment under this Agreement. During the term of this Agreement, the Employee
shall not, at any time or place, either directly or indirectly, engage in any
business or activity in competition with the business affairs or interest of the
Companies. 

 

 

(b)    During
the term of this Agreement and, in the event of termination prior to expiration
of such term, except as otherwise provided in the next sentence, the Employee
will not be a director, officer, or employee of, or consultant to, any federal
or state financial, institution other than the Companies or their subsidiaries
or affiliates, operating within 50 miles of any of the Companies. Such
non-compete covenant shall terminate and be of no further force and effect upon
the earliest to occur of (i) one year after the expiration date of this
Agreement or (ii) one year after termination of the Employee’s employment under
Subsection 9(c) or 9(f).

 

(c)    Nothing
contained in this Section 6 shall be deemed to prevent or limit the right of the
Employee to invest in the capital stock or other securities of any business
dissimilar from that of the Companies or, solely as a passive and minority
investor in any business.

 

7.    The
Employee shall perform his duties under this Agreement in accordance with such
reasonable standards expected of employees with comparable positions in
comparable organizations and as may be established from time to time by the
Boards.

 

8.    At such
reasonable times as the Boards shall in their discretion permit, the Employee
shall be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment under this Agreement, all such voluntary absences
to count as vacation time; provided that:

 

(a)    The
Employee shall be entitled to an annual vacation in accordance with the policies
as periodically established by the Boards for senior management officials of the
Companies, which shall in no event be less than three weeks.

 

(b)    The
Employee shall not be entitled to receive any additional compensation from the
Companies on account of his failure to take a vacation; nor shall he be entitled
to accumulate unused vacation from one fiscal year to the next except to the
extent authorized by the Boards for senior management officials of the
Companies.

 

(c)    In
addition to the aforesaid paid vacations, the Employee shall be entitled without
loss of pay, to absent himself voluntarily from the performance of his
employment with the Companies for such additional periods of time and for such
valid and legitimate reasons as the Boards in their discretion may
determine.

 

(d)    In
addition, the Employee shall be entitled to an annual sick leave as established
by the Boards for senior management officials of the Companies. In the event any
sick leave shall not have been used during any year, such leave shall not accrue
to subsequent years unless authorized by the Boards. Upon termination of his
employment, the Employee shall not be entitled to receive any additional
compensation from the Companies for unused sick leave.

 

9.    The
Employee’s employment under this Agreement shall be terminated upon the
following occurrences:

 

(a)    The death
of the Employee during the term of this Agreement, in which event the Employee’s
estate shall be entitled to receive the compensation due the Employee through
the last day of the calendar month in which the Employee’s death shall have
occurred (including any bonus under Section 3, pro rated through the last day of
such calendar month, to which the Employee would have been eligible to receive
had he been alive when bonuses were next declared), and any vested rights and
benefits of the Employee pursuant to any plan of the Companies, whether or not
written.

 

(b)    The
Boards may terminate the Employee’s employment at any time, but any termination
by the Boards other than termination for Cause (defined below), shall not
prejudice the Employee’s right to compensation or other benefits as provided for
under this Agreement. The Employee shall have no right to receive compensation
or other benefits, except at the discretion of the Boards after termination for
Cause. Termination for “Cause” shall
mean termination for gross negligence or gross neglect or the commission of a
felony or gross misdemeanor involving moral turpitude, fraud, dishonesty or
willful violation of any law that results in any adverse effect on either of the
Companies, or for intentional failure to perform stated duties.

 

 

(c)    In the
event the Employee’s employment under this Agreement is terminated by the Boards
without Cause, the Companies shall be obligated to pay the Employee the payment
of one-year salary based on the current year salary at the time of termination.
Said sum shall be paid in one lump sum within 15 days of the
termination.

 

(d)    If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Companies’ business by an order issued by the Delaware
Commissioner of Financial Regulation, the Federal Deposit Insurance Corporation,
the Board of Governors of the Federal Reserve System, or other appropriate
supervisory agency, obligations under this Agreement shall terminate, as of the
effective date of the order, but vested rights of the parties shall not be
affected.

 

(e)    The
voluntary termination by the Employee during the term of this Agreement with the
delivery of no less than 90 days written notice to the Boards, in which case the
Employee shall be entitled to receive only his compensation, vested rights, and
all employee benefits up to the date of his termination, unless otherwise
provided by law.

 

(f)    Notwithstanding
any other provision of this Agreement to the contrary (except this Subsection
9(f)), the Employee may voluntarily terminate the Employee’s employment within
12 months following a Change in Control of the Companies during the initial 48
month term of this Agreement, and the Employee shall thereupon be entitled to
receive the payment of one year salary based on the current year salary at the
time of termination, upon the occurrence of any of the following events, or
within 90 days thereafter, which have not been consented to in advance by the
Employee in writing: (i) a
reduction in the Employee’s base compensations in effect on the date of the
Change in Control or as the same may be increased from time to time;
(ii) the
failure by the Companies to continue to provide the Employee with the
compensation and benefits provided for under this Agreement, as the same may be
changed by mutual agreement from time to time, or with benefits substantially
similar to those provided to the Employee under any employee benefit plan in
which the Employee is a participant at the time of the Change in Control, or the
taking of any action which would materially reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed by the Employee at
the time of the Change in Control; (iii) the
assignment to the Employee of duties and responsibilities materially different
from those normally associated with the Employee’s position as referenced at
Section 1; or (iv) a
material diminution or reduction in the Employee’s responsibilities or authority
(including reporting responsibilities) in connection with the Employee’s
employment with the Companies. Said sum shall be paid in one lump sum within 15
days of the termination.

 

The term
“Change
in Control” shall
mean any one of the following events: (i) the
acquisition of ownership, holding or power to vote more than 25% of the
Companies’ voting stock; (ii) the
acquisition of the ability to control the election of a majority of the
Companies’ directors; (iii) the
acquisition of a controlling influence over the management or policies of
Companies by any person or by person acting as a “group” within
the meaning of Section 12(d) of the Securities Exchange Act of 1934);
(iv) the
acquisition of control of the Companies within the meaning of 12 C.F.R. Part
5.50 or its applicable equivalent (except in the case of (i), (ii), (iii), or
(iv) if this paragraph, the Companies’ mere formation of a holding company shall
not itself constitute a Change in Control), or (v) during
the period of two consecutive years, individuals (the “Continuing
Directors”) who at
the beginning of such period constitute the Boards of the Companies (the
“Existing
Board”) cease
for any reason to constitute at least two-thirds thereof, provided that any
individual whose election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For purposes of this paragraph only, the term
“person” refers
to an individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein.

 

(g)    Any
payments made to the Employee pursuant to this Agreement, or otherwise, are
subject to, and conditioned upon their compliance with 12 U.S.C. Section 1828(k)
and any regulations promulgated thereunder.

 

(h)    As a
condition of receiving any payments under paragraph 9(c) or 9(f), Employee shall
be required to sign a release and covenant not to sue.

 

10.    (a)    The
suspension of the Employee from office and/or temporary prohibition from
participation in the conduct of the affairs of the Companies pursuant to notice
served by the appropriate regulatory agency, unless stayed by appropriate
proceedings, shall suspend, as of the date of such service, all obligations of
the Companies under the terms of this Agreement.

 

 

(b)    In the
event the charges specified in a notice served as provided in Section 10(a)
shall be dismissed, the Companies shall (i) pay the
Employee any compensation withheld from the Employee pursuant to the suspension
of the Companies’ obligations as required in Section 10(a) and (ii)
reinstate the obligations suspended as required in Section 10(a).

 

11.    If the
Employee shall become disabled or incapacitated, as determined by the Employee’s
physician, to the extent that he is unable to perform the duties provided in
Section 1, he shall nevertheless continue to receive the following percentages
of his compensation, inclusive of any benefits which may be payable to the
Employee under the provisions of any disability insurance in effect for the
Employee, under Section 2 for the following periods of disability: 100% for the
first 6 months, 75% for the next 12 months, and 50% thereafter for the remainder
of the initial term, or any renewal thereof, of this Agreement. Upon returning
to active full-time employment, the Employee’s full compensation as set forth in
this Agreement shall be reinstated. In the event that the Employee returns to
active employment on other than a full-time basis, then his compensation as set
forth in Section 2 may be reduced in proportion to the time spent in said
employment. If he is again unable to perform the duties provided in Section 1
due to illness or other incapacity, benefits under this Section 11 shall
(a) begin
again at 100% for the first 6 months if he has been engaged in active full-time
employment for more than 12 months immediately prior to such later absence or
inability or (b) resume
where benefits left off if he has been engaged in active full-time employment
for 12 months or less immediately prior to such later absence or
inability.

 

12.    (a)    This
Agreement shall inure to the benefit of and be binding upon any corporate or
other successor of the companies which shall acquire, directly or indirectly, by
merger, consolidation, purchase, or otherwise, all or substantially all of the
assets of the Companies.

 

(b)    Since the
Companies are contracting for the unique and personal skills of the Employee,
the Employee shall be precluded from assigning or delegating his rights or
duties hereunder without first obtaining the written consent of the
Companies.

 

13.    In the
event a dispute arises over benefits or other provisions under this Agreement,
then the parties hereto agree to submit the dispute to non-appealable binding
arbitration. The Board of Arbitrators shall consist of three members, with one
member selected by the Employee, one member selected by the Companies, and the
third member selected by the first two members. The party responsible for the
payment of the costs of such arbitration (including any legal fees and expenses
incurred by the Employee) shall be determined by the Board. The Board shall be
bound by the rules of the American Arbitration Association in making their
determination. The parties hereto agree that they and their heirs, personal
representatives, successors, and assigns shall be bound by the decision of such
Board with respect to any controversy properly submitted to it for
determination.

 

Where a
dispute arises as to the Companies’ discharge of the Employee for Cause, such
dispute shall likewise be submitted to arbitration as above described and the
parties hereto agree to be bound by the decision hereunder.

 

14.    This
Agreement supercedes all prior agreements with respect to your employment with
the Companies.

 

15.    No
amendments or additions to this Agreement shall be valid unless in writing and
signed by both parties, except as herein otherwise provided.

 

16.    This
Agreement shall be governed in all respects whether as to validity,
construction, capacity, performance or otherwise, by the laws of the State of
Maryland, except to the extent that Federal law shall be deemed to
apply.

 

17.    The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity and
enforceability of the other provisions hereof.

 

 

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

 

	
      ATTEST:
	 	
      THE
      FELTON BANK
	 
	 	 	 	 
	 	 	 	 
	
      /s/
      Susan E. Leaverton
	 	
      /s/
      W. Edwin Kee, Jr.
	 
	 	 	
      W.
      Edwin Kee, Jr., Chairman
	 
	 	 	 	 
	
      ATTEST:
	 	
      SHORE
      BANCSHARES, INC.
	 
	 	 	 	 
	 	 	 	 
	
      /s/
      Susan E. Leaverton
	 	
      W.
      Moorhead Vermilye
	 
	 	 	
      W.
      Moorhead Vermilye, Chairman
	 
	 	 	 	 
	
      WITNESS:
	 	 	 
	 	 	 	 
	 	 	 	 
	
      /s/
      Susan E. Leaverton
	 	
      /s/
      Thomas Evans
	 
	 	 	
      Thomas
      EvansEXHIBIT 10.1
                            STOCK PURCHASE AGREEMENT

      STOCK PURCHASE AGREEMENT, dated as of March 10, 2005 (this "Agreement"),
by and among the Castle and Morgan Holdings, Inc., a Delaware Corporation (the
"Company"), the persons listed on Schedule A to this Agreement (each a "Seller"
and collectively, the "Sellers") and the persons listed on Schedule B to this
Agreement (each a "Purchaser" and collectively, the "Purchasers"). The Company,
each Seller and each Purchaser are referred to herein as a "Party" and
collectively, as the "Parties".

                                   BACKGROUND

      The Sellers are collectively the owners of 2,384,584 shares (the "Seller
Shares") of the common stock of the Company, each holding the number of shares
set forth opposite his name on Schedule A. The Seller Shares represent
approximately 62.6% of the issued and outstanding capital stock of the Company
as of the date hereof calculated on a fully-diluted basis. In addition, one of
the Sellers, Internet Finance International Corporation, is the holder of a note
in the face amount of $52,920 payable by the Company which is convertible into
shares of common stock of the Company (the "Note"). The Purchasers desire to
purchase the Note and all of the Seller Shares by purchasing the number of
Seller Shares set forth opposite the Sellers' names on Schedule B.

      NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, the Company, the Sellers and the Purchasers
hereby agree as follows:

      1.    Purchase and Sale.

      Each Seller shall sell, transfer, convey and deliver unto the Purchasers
the face amount of the Note and the number of Seller Shares set forth opposite
each such Seller's name on Schedule A to this Agreement, and each Purchaser
shall acquire and purchase from the Sellers the face value of the Note and
number of Seller Shares set forth opposite each such Purchaser's name on
Schedule B to this Agreement.

      2.    Purchase Price.

            (a) General. The purchase price (the "Purchase Price") for the
      Seller Shares and Note, in the aggregate, is Four Hundred Thousand Dollars
      ($400,000) payable as specified in this Section 2 subject to the other
      terms and conditions of this Agreement. Purchasers shall also pay Sellers'
      legal fees of Two Thousand Five Hundred Dollars ($2,500) (the "Legal
      Fees").

            (b) Cash Deposit. Concurrent with the execution of this Agreement,
      Purchasers shall deliver a non-refundable (subject to the provisions of
      par. 8, below) cash deposit to the Seller Representative in the amount of
      Twenty-Five Thousand Dollars ($25,000) which shall be fully credited
      against the Purchase Price at the Closing (the "Cash Deposit").

<PAGE>

            (c) Payment at Closing. At the Closing, the Purchasers shall pay to
      the Sellers Three Hundred Seventy Seven Thousand Five Hundred Dollars
      ($377,500), representing the balance of the Purchase Price and the Legal
      Fees, which together with the Cash Deposit, shall be payable in the
      amounts set forth in Schedule A and allocated as set forth in Schedule B.

            (d) Adjustment for Outstanding Liabilities. In the event that the
      Company shall have any liability (whether known or unknown, whether
      asserted or unasserted, whether absolute or contingent, whether accrued or
      unaccrued, whether liquidated or unliquidated, and whether due or to
      become due), including any liability for taxes ("Liability"), as of the
      Closing, the portion of the Purchase Price payable at the Closing shall be
      reduced on a dollar for dollar basis by the amount of such Liability.

3.       The Closing.

            (a) General. The closing of the transactions contemplated by this
      Agreement (the "Closing") shall take place by exchange of documents among
      the Parties by fax or courier, as appropriate, following the satisfaction
      or waiver of all conditions to the obligations of the Parties to
      consummate the transactions contemplated hereby (other than conditions
      with respect to actions the respective Parties will take at the Closing
      itself) not later than March 10, 2005 or such other date as the Purchasers
      and the Sellers may mutually determine (the "Closing Date").

            (b) Delivery of Certificates in Escrow. Concurrent with or
      immediately following the execution of this Agreement, each Seller shall
      deliver certificates evidencing all of the Seller Shares held by such
      Seller and the ownership of the Note (collectively, the "Certificates") to
      the Law Offices of Robert L. B. Diener ("Law Firm") on the date hereof.
      The Law Firm shall hold such certificates in escrow pursuant to the Escrow
      Agreement (the "Escrow Agreement") in the form of Exhibit A being entered
      into on the date hereof by the Law Firm, the Seller Representative (as
      defined below) and the Purchaser Representative. Pursuant to the Escrow
      Agreement, the Certificates and the Note will be held in escrow until the
      Closing at which time the Law Firm shall deliver the Certificates and the
      Note to the Purchasers against delivery to the Sellers of the portion of
      the Purchase Price and Legal Fees that are due at Closing.

            (c) Deliveries at the Closing. At the Closing: (i) the Sellers shall
      deliver to the Purchasers the various certificates, instruments, and
      documents referred to in Section 12(a) below, (ii) the Purchasers shall
      deliver to the Sellers the various certificates, instruments, and
      documents referred to in Section 12(b) below, (iii) the Sellers shall
      deliver to the Purchasers the Certificates, endorsed in blank or
      accompanied by duly executed assignment documents and including a
      Medallion Guarantee, including delivery by releasing the Certificates from
      escrow and the Note, and (iv) the Purchasers shall deliver to the Sellers
      the Purchase Price and Legal Fees.

                                       2
<PAGE>

4.    Appointment of Seller and Purchaser Representatives.

            (a) Appointment of Seller Representative. The Sellers hereby
      irrevocably constitute and appoint, effective as of the date hereof,
      Christopher Kern (together with his permitted successors, the "Seller
      Representative"), as their true and lawful agent and attorney-in-fact to
      enter into any agreement in connection with the transactions contemplated
      by this Agreement and any transactions contemplated by the Escrow
      Agreement, to perform on behalf of the Sellers any obligations or
      undertakings thereunder, to exercise all or any of the powers, authority
      and discretion conferred on him under any such agreement, to waive any
      terms and conditions of any such agreement, to give and receive notices on
      their behalf and to be their exclusive representative with respect to any
      matter, suit, claim, action or proceeding arising with respect to any
      transaction contemplated by any such agreement and the Seller
      Representative agrees to act as, and to undertake the duties and
      responsibilities of, such agent and attorney-in-fact. This power of
      attorney is coupled with an interest and irrevocable. The Seller
      Representative shall not be liable for any action taken or not taken by
      him in connection with his obligations under this Agreement as long as
      such actions are taken or omitted in good faith and in the absence of
      willful misconduct or gross negligence. If the Seller Representative shall
      be unable or unwilling to serve in such capacity, his successor shall be
      named by those persons holding more than fifty percent (50%) in interest
      of the Seller Shares.

            (b) Appointment of the Purchaser Representative. The Purchasers
      hereby irrevocably constitute and appoint, effective as of the date
      hereof, Peter C. Zachariou (together with his permitted successors, the
      "Purchaser Representative"), as their true and lawful agent and
      attorney-in-fact to enter into any agreement in connection with the
      transactions contemplated by this Agreement and any transactions
      contemplated by the Escrow Agreement, to perform on behalf of the Sellers
      any obligations or undertakings thereunder, to exercise all or any of the
      powers, authority and discretion conferred on him under any such
      agreement, to waive any terms and conditions of any such agreement (other
      than the amount of the Purchase Price), to give and receive notices on
      their behalf and to be their exclusive representative with respect to any
      matter, suit, claim, action or proceeding arising with respect to any
      transaction contemplated by any such agreement and the Purchaser
      Representative agrees to act as, and to undertake the duties and
      responsibilities of, such agent and attorney-in-fact. This power of
      attorney is coupled with an interest and irrevocable. The Purchaser
      Representative shall not be liable for any action taken or not taken by
      him in connection with his obligations under this Agreement as long as
      such actions are taken or omitted in good faith and in the absence of
      willful misconduct or gross negligence. If the Purchaser Representative
      shall be unable or unwilling to serve in such capacity, his successor
      shall be named by those persons agreeing to acquire more than fifty
      percent (50%) in interest of the Seller Shares pursuant to this Agreement.

                                       3
<PAGE>

5.    Representations and Warranties of the Sellers.

      Each Seller represents and warrants to the Purchasers that the statements
contained in this Section 5 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5):

            (a) Each Seller has the power and authority to execute, deliver and
      perform such Seller's obligations under this Agreement and to sell,
      assign, transfer and deliver to the Purchasers the Seller Shares and Note
      as contemplated hereby. No permit, consent, approval or authorization of,
      or declaration, filing or registration with any governmental or regulatory
      authority or consent of any third party is required in connection with the
      execution and delivery any Seller of this Agreement and the consummation
      of the transactions contemplated hereby.

            (b) Neither the execution and delivery of this Agreement, nor the
      consummation of the transactions contemplated hereby or compliance with
      the terms and conditions hereof by the Sellers will violate or result in a
      breach of any term or provision of any agreement to which any Seller is
      bound or is a party, or be in conflict with or constitute a default under,
      or cause the acceleration of the maturity of any obligation of any Seller
      under any existing agreement or violate any order, writ, injunction,
      decree, statute, rule or regulation applicable to any Seller or any
      properties or assets of any Seller.

            (c) This Agreement has been duly and validly executed by each
      Seller, and constitutes the valid and binding obligation of each Seller,
      enforceable against each Seller in accordance with its terms, except as
      enforceability may be limited by bankruptcy, insolvency or other laws
      affecting creditors' rights generally or by limitations, on the
      availability of equitable remedies. The Seller Representative has been
      duly appointed herein by the Sellers and has complete authority to act on
      behalf of the Sellers in matters relating to this Agreement and the
      transactions contemplated hereby

            (d) The Seller Shares and Note are owned beneficially and of record
      by each Seller in the amounts specified on Schedule A and are validly
      issued and outstanding, fully paid for and non-assessable with no personal
      liability attaching to the ownership thereof. Each Seller owns the number
      of Seller Shares and face amount of the Note set forth opposite such
      Seller's name on Schedule A free and clear of all liens, charges, security
      interests, encumbrances, claims of others, options, warrants, purchase
      rights, contracts, commitments, equities or other claims or demands of any
      kind (collectively, "Liens"), and upon delivery of the Seller Shares and
      the Note to the Purchasers, the Purchasers will acquire good, valid and
      marketable title thereto free and clear of all Liens. No Seller is a party
      to any option, warrant, purchase right, or other contract or commitment
      that could require the Seller to sell, transfer, or otherwise dispose of
      any capital stock of the Company (other than pursuant to this Agreement).
      No Seller is a party to any voting trust, proxy, or other agreement or
      understanding with respect to the voting of any capital stock of the
      Company.

                                       4
<PAGE>

            (e) Of the Seller Shares, 221,500 of such Seller Shares were
      included in a registration statement which has been previously filed by
      the Company with the U.S. Securities and Exchange Commission and declared
      effective by the Commission.

6.    Representations and Warranties of the Company.

            (a) The Company is a corporation in good standing duly incorporated
      in the State of Delaware. The Company is duly authorized to conduct
      business and is in good standing under the laws of each jurisdiction where
      such qualification is required. The Company has full corporate power and
      authority and all licenses, permits, and authorizations necessary to carry
      on its business. The Company has no subsidiaries and does not control any
      other subsidiaries, directly or indirectly, or have any direct or indirect
      equity participation in any other entity.

            (b) Neither the execution and delivery of this Agreement, nor the
      consummation of the transactions contemplated hereby or compliance with
      the terms and conditions hereof by the Company will violate or result in a
      breach of any term or provision of any agreement to which the Company is
      bound or is a party, or the Company's Certificate of Incorporation or
      By-Laws, or be in conflict with or constitute a default under, or cause
      the acceleration of the maturity of any obligation of the Company under
      any existing agreement or violate any order, writ, injunction, decree,
      statute, rule or regulation applicable to the Company or any of its
      properties or assets.

            (c) This Agreement has been duly and validly executed by the Company
      and constitutes the valid and binding obligation of the Company,
      enforceable against it in accordance with its terms, except as
      enforceability may be limited by bankruptcy, insolvency or other laws
      affecting creditors' rights generally or by limitations, on the
      availability of equitable remedies.

            (d) The Company's authorized capital stock, as of the date of this
      Agreement and as of the Closing, consists of 100,000,000 shares of Common
      Stock, $0.0001 par value per share, of which 3,809,570 shares are issued
      and outstanding. The Company has not reserved any shares of its Common
      Stock for issuance upon the exercise of options, warrants or any other
      securities that are exercisable or exchangeable for, or convertible into,
      Common Stock. All of the issued and outstanding shares of Common Stock are
      validly issued, fully paid and non-assessable and have been issued in
      compliance with applicable laws, including, without limitation, applicable
      federal and state securities laws. There are no outstanding options,
      warrants or other rights of any kind to acquire any additional shares of
      capital stock of the Company or securities exercisable or exchangeable
      for, or convertible into, capital stock of the Company, nor is the Company
      committed to issue any such option, warrant, right or security. There are
      no agreements relating to the voting, purchase or sale of capital stock
      (i) between or among the Company and any of its stockholders, or (ii) to
      the best knowledge of the Company between or among any of the Company's
      stockholders. The Company is not a party to any agreement granting any
      stockholder of the Company the right to cause the Company to register
      shares of the capital stock of the Company held by such stockholder under
      the Securities Act. The stockholder list provided to the Purchasers is a
      current shareholder list generated by its transfer agent, and such list
      accurately reflects all of the issued and outstanding shares of the
      Company's Common Stock.

                                       5
<PAGE>

            (e) The Company does not have any restrictions in place relative to
      its ability to implement any reverse split of its common stock, nor are
      there any restrictions on the Company's ability to enter into a merger
      transaction with any other entity.

            (f) As of the date hereof the Company has total Liabilities of
      approximately $65,000, $52,920 of which will be purchased by Purchasers as
      part of the Note, and the balance of which Liabilities will be paid off at
      or prior to the Closing and shall in no event become the Liability of the
      Purchasers or remain the Liabilities of the Company following the Closing.
      On or before Closing, the Company shall deliver to Purchaser a Schedule of
      the Company's outstanding liabilities, excluding the Note (the "Closing
      Liabilities"). At Closing, an amount equal to the Closing Liabilities
      shall be delivered to Sellers' attorney, Robert L. Davidson, Esq., who
      will then pay off the Closing Liabilities.

            (g) There is no legal, administrative, investigatory, regulatory or
      similar action, suit, claim or proceeding which is pending or, to any
      Seller's knowledge, threatened against the Company.

            (h) During the period from the date of filing of its Form SB-2
      through September 30, 2004, the Company has filed or furnished (i) all
      reports, schedules, forms, statements, prospectuses and other documents
      required to be filed with, or furnished to, the Securities and Exchange
      Commission (the "SEC") by the Company (all such --- documents, as amended
      or supplemented, are referred to collectively as, the "Company SEC
      Documents") and (ii) all certifications and statements required by (x)
      Rule 13a-14 or 15d-14 under the Exchange Act, or (y) 18 U.S.C. ss.1350
      (Section 906 of the Sarbanes-Oxley act of 2002) with respect to any
      applicable Company SEC Document (collectively, the "SOX Certifications").
      The Company has made available to the Purchasers all ------------------
      SOX Certifications and comment letters received by the Company from the
      staff of the SEC and all responses to such comment letters by or on behalf
      of the Company. Through September 30, 2004, the Company complied in all
      respects with its SEC filing obligations under the Exchange Act and the
      Securities Act. Each of the audited financial statements and related
      schedules and notes thereto and unaudited interim financial statements of
      the Company (collectively, the "Company Financial Statements") contained
      in the Company SEC Documents (or incorporated therein by reference) were
      prepared in accordance with United States generally accepted accounting
      principles applied on a consistent basis ("GAAP") (except in the case of
      interim ---- unaudited financial statements) except as noted therein, and
      fairly present in all respects the consolidated financial position of the
      Company and its consolidated subsidiaries as of the dates thereof and the
      consolidated results of their operations, cash flows and changes in
      stockholders' equity for the periods then ended, subject (in the case of
      interim unaudited financial statements) to normal year-end audit
      adjustments (the effect of which will not, individually or in the
      aggregate, be adverse) and, such financial statements complied as to form
      as of their respective dates in all respects with applicable rules and
      regulations of the SEC. The financial statements referred to herein
      reflect the consistent application of such accounting principles
      throughout the periods involved, except as disclosed in the notes to such
      financial statements. No financial statements of any Person not already
      included in such financial statements are required by GAAP to be included
      in the consolidated financial statements of the Company. As of their
      respective dates, each the Company SEC Document was prepared in accordance
      with and complied with the requirements of the Securities Act or the
      Exchange Act, as applicable, and the rules and regulations thereunder, and
      the Company SEC Documents (including all financial statements included
      therein and all exhibits and schedules thereto and all documents
      incorporated by reference therein) did not, as of the date of
      effectiveness in the case of a registration statement, the date of mailing
      in the case of a proxy or information statement and the date of filing in
      the case of other the Company SEC Documents, contain any untrue statement
      of a fact or omit to state a fact required to be stated therein or
      necessary to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. Neither the
      Company nor, to the Company's knowledge, any of its officers has received
      notice from the SEC or any other governmental authority questioning or
      challenging the accuracy, completeness, content, form or manner of filing
      or furnishing of the SOX Certifications.

                                       6
<PAGE>

            (i) The Company has properly and timely filed all federal, state and
      local tax returns and has paid all taxes, assessments and penalties due
      and payable. The Company's tax returns for 2004 have not been filed,
      however they will be filed prior to the Closing. All such tax returns were
      complete and correct in all respects as filed, and no claims have been
      assessed with respect to such returns. There are no present, pending, or
      threatened audit, investigations, assessments or disputes as to taxes of
      any nature payable by the Company or any of its subsidiaries, nor any tax
      liens whether existing or inchoate on any of the assets of the Company or
      any of its subsidiaries, except for current year taxes not presently due
      and payable. No IRS or foreign, state, county or local tax audit is
      currently in progress. Neither the Company nor any of its subsidiaries has
      waived the expiration of the statute of limitations with respect to any
      taxes. There are no outstanding requests by the Company or any of its
      Subsidiaries for any extension of time within which to file any tax return
      or to pay taxes shown to be due on any tax return.

            (j) The Company does not have any ongoing operations and does not
      employ any employees and does not maintain any employee benefit or stock
      option plans.

                                       7
<PAGE>

            (k) Except as set forth in Schedule 6(k), since September 30, 2004,
      there has not been any event or condition of any character which has
      adversely affected, or may be expected to adversely affect, the Company's
      business or prospects, including, but not limited to any adverse change in
      the condition, assets, liabilities (existing or contingent) or business of
      the Company from that shown in the financial statements of the Company
      included in its quarterly report on Form 10-QSB filed for the quarter
      ended September 30, 2004.

            (l) The Company has complied in all material respects with all
      applicable laws (including rules, regulations, codes, plans, injunctions,
      judgments, orders, decrees, rulings, and charges thereunder) of all
      governmental authorities, and no action, suit, proceeding, hearing,
      investigation, charge, complaint, claim, demand, or notice has been filed
      or commenced against the Company alleging any failure so to comply. To the
      knowledge of any Seller, neither the Company, nor any officer, director,
      employee, consultant or agent of the Company has made, directly or
      indirectly, any payment or promise to pay, or gift or promise to give or
      authorized such a promise or gift, of any money or anything of value,
      directly or indirectly, to any governmental official, customer or supplier
      for the purpose of influencing any official act or decision of such
      official, customer or supplier or inducing him, her or it to use his, her
      or its influence to affect any act or decision of a governmental authority
      or customer, under circumstances which could subject the Company or any
      officers, directors, employees or consultants of the Company to
      administrative or criminal penalties or sanctions.

            (m) No representation or warranty by the Company in this Agreement,
      nor in any certificate, schedule or exhibit delivered or to be delivered
      pursuant to this Agreement contains or will contain any untrue statement
      of material fact, or omits or will omit to state a material fact necessary
      to make the statements herein or therein, in light of the circumstances
      under which they were made, not misleading.

7.    Representations and Warranties of the Purchasers.

      Each Purchaser represents and warrants to the Sellers as follows:

            (a) Each Purchaser has full power and authority to enter into this
      Agreement and to carry out the transactions contemplated hereby. This
      Agreement constitutes a valid and binding obligation of each Purchaser
      enforceable in accordance with its terms, except as (i) the enforceability
      hereof may be limited by bankruptcy, insolvency or similar laws affecting
      the enforceability of creditor's rights generally and (ii) the
      availability of equitable remedies may be limited by equitable principles
      of general applicability.

            (b) Neither the execution and delivery of this Agreement nor the
      consummation of the transactions contemplated hereby, nor compliance by
      any Purchaser with any of the provisions hereof will: violate, or conflict
      with, or result in a breach of any provision of, or constitute a default
      (or an event which, with notice or lapse of time or both, would constitute
      a default) under, or result in the termination of, or accelerate the
      performance required by, or result in the creation of any Lien upon any of
      the properties or assets of Purchaser under any of the terms, conditions
      or provisions of any material note, bond, indenture, mortgage, deed or
      trust, license, lease, agreement or other instrument or obligation to
      which he is a party or by which he or any of his properties or assets may
      be bound or affected, except for such violations, conflicts, breaches or
      defaults as do not have, in the aggregate, any material adverse effect; or
      violate any material order, writ, injunction, decree, statute, rule or
      regulation applicable to Purchaser or any of its properties or assets,
      except for such violations which do not have, in the aggregate, any
      material adverse effect.

                                       8
<PAGE>

            (c) Each Purchaser is acquiring the Seller Shares and Note for its
      own account for investment and not for the account of any other person and
      not with a view to or for distribution, assignment or resale in connection
      with any distribution within the meaning of the Securities Act. Each
      Purchaser agrees not to sell or otherwise transfer the Seller Shares or
      any shares issued upon conversion of the Note unless they are registered
      under the Securities Act and any applicable state securities laws, or an
      exemption or exemptions from such registration are available. Each
      Purchaser has knowledge and experience in financial and business matters
      such that it is capable of evaluating the merits and risks of acquiring
      the Seller Shares and Note.

            (d) No permit, consent, approval or authorization of, or
      declaration, filing or registration with any governmental or regulatory
      authority or the consent of any third party is required in connection with
      the execution and delivery by Purchaser of this Agreement and the
      consummation of the transactions contemplated hereby.

8.    Due Diligence.

      Prior to the Closing, the Purchasers will conduct a due diligence
investigation relative to the Company and the representations, warranties and
covenants of the Sellers and the Company. Sellers and the Company agree to
provide the Purchasers and its agents and representatives with any and all due
diligence documents reasonably requested, including but not limited to financial
statements and evidence of the Company's good standing in all jurisdictions
where it is authorized to do business. Purchasers shall have the right, in their
sole discretion, to terminate this Purchase Agreement at any time prior to the
Closing, without any liability therefor, should it determine that any
representation, warranty or covenant of any Seller or the Company is untrue or
misleading in any material respect or cannot be verified through the due
diligence process. Purchasers shall also have the right, exercisable within five
business days of the effective date of this Agreement, in their sole discretion,
to terminate this Agreement without any liability thererfor, should Purchasers
determine, in their sole discretion that the Company is unsuitable for use as a
vehicle for a reverse acquisition transaction. In the event of any termination
based on this section 8, the Purchasers shall be entitled to the return of the
Cash Deposit

                                       9
<PAGE>

9.    Brokers and Finders.

      The Purchasers shall assume full responsibility for the payment of any
finders' fees to Andy Baum and the Sellers shall assume full responsibility for
the payment of any finders' fees to Cody Corrubia. There are no other finders
and no parties shall be responsible for the payment of any finders' fees other
than as specifically set forth herein. Other than the foregoing, neither any
Seller nor the Company, nor any of their respective directors, officers or
agents on their behalf, have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or financial
advisory services or other similar payment in connection with this Agreement.

10.   Pre-Closing Covenants.

      The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.

            (a) General. Each of the Parties will use his or its best efforts to
      take all action and to do all things necessary, proper, or advisable in
      order to consummate and make effective the transactions contemplated by
      this Agreement (including satisfaction, but not waiver, of the closing
      conditions set forth in Section 12 below).

            (b) Form 8-K Filing; Notices and Consents. Concurrent with the
      execution of this Agreement, the Company shall cause a Form 8-K to be
      filed with the U.S. Securities and Exchange Commission with respect to its
      having entered into a "material contract" and a "change of control". The
      Seller Representative will cause the Company to give any notices to third
      parties, and will cause the Company to use its best efforts to obtain any
      third party consents, that the Purchaser Representative may reasonably
      request. Each of the Parties will (and the Sellers will cause the Company
      to) give any notices to, make any filings with, and use its best efforts
      to obtain any authorizations, consents, and approvals of governmental
      authorities necessary in order to consummate the transactions contemplated
      hereby. The Company nor any Seller is aware of any third party consent nor
      other filing or notice to third parties that is necessary in respect of
      this Agreement.

            (c) Operation of Business. The Seller will not cause or permit the
      Company to engage in any practice, take any action, or enter into any
      transaction except for ministerial matters necessary to maintain the
      Company in good standing and to arrange for the filing of all necessary
      reports required under the Securities Exchange Act. Without limiting the
      generality of the foregoing, the Sellers will not cause or permit the
      Company to (i) declare, set aside, or pay any dividend or make any
      distribution with respect to its capital stock or redeem, purchase, or
      otherwise acquire any of its capital stock except as otherwise expressly
      specified herein, (ii) issue, sell, or otherwise dispose of any of its
      capital stock, or grant any options, warrants, preemptive or other rights
      to purchase or obtain (including upon conversion, exchange, or exercise)
      any of its capital stock, (iii) make any capital expenditures, loans, or
      incur any other obligations or liabilities, (iv) enter into any agreements
      involving expenditures individually, or in the aggregate, of more than
      $1,000 (other than agreements for professional services which will be paid
      in full at or prior to the Closing), (v) enter into any agreement or incur
      any other commitment or (vi) otherwise engage in any practice, take any
      action, or enter into any transaction that is inconsistent with the
      transactions contemplated hereby.

                                       10
<PAGE>

            (d) Preservation of Business. The Sellers will cause the Company to
      keep its business and properties substantially intact.

            (e) Notice of Developments. The Sellers will give prompt written
      notice to the Purchaser Representative of any material adverse development
      causing a breach of any of the representations and warranties in Section 5
      above. No disclosure by any Party pursuant to this Section, however, shall
      be deemed to amend or supplement the disclosures contained in the
      Schedules hereto or to prevent or cure any misrepresentation, breach of
      warranty, or breach of covenant.

            (f) Exclusivity. Except to the extent the directors of the Company
      are required by their fiduciary duty under Delaware law, none of the
      Sellers or the Company shall, directly or indirectly, (i) solicit,
      initiate, or encourage the submission of any proposal or offer from any
      person relating to the acquisition of the Seller Shares, the Note or any
      capital stock or other voting securities, or any assets (including any
      acquisition structured as a merger, consolidation, or share exchange) of
      the Company or (ii) participate in any discussions or negotiations
      regarding, furnish any information with respect to, assist or participate
      in, or facilitate in any other manner any effort or attempt by any person
      to do or seek any of the foregoing. None of the Sellers will vote the
      shares of the Company's Common Stock held by them in favor of any such
      acquisition structured as a merger, consolidation, or share exchange. The
      Sellers shall notify the Purchaser immediately if any person makes any
      proposal, offer, inquiry, or contact with respect to any of the foregoing.

11.   Post-Closing Covenants. The Parties agree as follows with respect to the
      period following the Closing.

            (a) General. In case at any time after the Closing any further
      action is necessary or desirable to carry out the purposes of this
      Agreement, each of the Parties will take such further action (including
      the execution and delivery of such further instruments and documents) as
      any other Party may reasonably request, all at the sole cost and expense
      of the requesting Party (unless the requesting Party is entitled to
      indemnification therefor under Section 13 below). The Sellers acknowledge
      and agree that from and after the Closing the Purchasers will be entitled
      to possession of all documents, books, records (including tax records),
      agreements, and financial data of any sort relating to the Company.

            (b) Litigation Support. In the event and for so long as any Party
      actively is contesting or defending against any action, suit, proceeding,
      hearing, investigation, charge, complaint, claim, or demand in connection
      with (i) any transaction contemplated under this Agreement or (ii) any
      fact, situation, circumstance, status, condition, activity, practice,
      plan, occurrence, event, incident, action, failure to act, or transaction
      on or prior to the Closing Date involving the Company, the other Party
      will cooperate with him or it and his or its counsel in the contest or
      defense, make available their personnel, and provide such testimony and
      access to their books and records as shall be necessary in connection with
      the contest or defense, all at the sole cost and expense of the contesting
      or defending Party (unless the contesting or defending Party is entitled
      to indemnification therefor under Section 13 below).

                                       11
<PAGE>

            (c) Immediately following the Closing, the Company shall file a
      Post-Effective Amendment to its SB-2 Registration Statement (the
      "Registration Statement") deregistering all of the shares covered in the
      Registration Statement that remain unsold as of the Closing. The Company
      shall thereafter cause its attorneys to provide any opinion letters
      reasonably required and appropriate for any of the selling shareholders
      listed in the Registration Statement to sell their shares pursuant to Rule
      144(d) or 144(k) (as applicable) under the Securities Act of 1933, as
      amended.

12.   Conditions to Obligation to Close.

            (a) Conditions to Obligation of the Purchaser.

      The obligation of the Purchasers to consummate the transactions to be
performed by the Purchasers in connection with the Closing are subject to
satisfaction of the following conditions:

                  (i) the representations and warranties set forth in Sections 5
            and 6 above shall be true and correct in all material respects at
            and as of the Closing Date;

                  (ii) the Sellers shall have performed and complied with all of
            their covenants hereunder in all material respects through the
            Closing;

                  (iii) the Company shall have procured all of the third party
            consents required in order to effect the Closing;

                  (iv) no action, suit, or proceeding shall be pending or
            threatened before any court or quasi-judicial or administrative
            agency of any federal, state, local, or foreign jurisdiction or
            before any arbitrator wherein an unfavorable injunction, judgment,
            order, decree, ruling, or charge would (A) prevent consummation of
            any of the transactions contemplated by this Agreement, (B) cause
            any of the transactions contemplated by this Agreement to be
            rescinded following consummation, (C) affect adversely the right of
            the Purchasers to own the Seller Shares and to control the Company,
            or (D) affect adversely the right of the Company to own its assets
            and to operate its businesses (and no such injunction, judgment,
            order, decree, ruling, or charge shall be in effect);

                  (v) the Sellers shall have delivered to the Purchasers a
            certificate to the effect that (A) each of the conditions specified
            above in Section 12(a)(i)-(iv) is satisfied in all respects, and (B)
            as of the Closing, the Company has no Liabilities;

                                       12
<PAGE>

                  (vi) the Purchasers shall have received the resignations of
            each director and officer of the Company effective as of the
            Closing. The designees specified by the Purchasers shall have been
            appointed as officers of the Company and any designees of the
            Purchasers who may be lawfully appointed to the Board of Directors
            of the Company as of the Company shall have been appointed;

                  (vii) there shall not have been any occurrence, event,
            incident, action, failure to act, or transaction since September 30,
            2004 which has had or is reasonably likely to cause a material
            adverse effect on the business, assets, properties, financial
            condition, results of operations or prospects of the Company;

                  (viii) the Purchasers shall have completed their business,
            accounting and legal due diligence review of the Company, and the
            results thereof shall be satisfactory to the Purchasers;

                  (ix) the Purchasers shall have conducted UCC, judgment lien
            and tax lien searches with respect to the Company, the results of
            which indicate no liens on the assets of the Company;

                  (x) the Company shall have delivered its Certificate of
            Incorporation and bylaws, both as amended to the Closing Date,
            certified by the Secretary of the Company, resolutions adopted by
            the Board of Directors of the Company authorizing this Agreement and
            the transactions contemplated hereby and the Company shall have
            delivered to the Purchasers the Company's original minute book and
            corporate seal and all other original corporate documents and
            agreements;

                  (xi) the Company shall deliver to the Purchasers a Certificate
            of Good Standing in respect of the Company issued by the Delaware
            Secretary of State dated no earlier than 5 days prior to the
            closing.

                  (xii) the Company shall have maintained at and immediately
            after the Closing its status as a company whose Common Stock is
            quoted on the OTB Bulletin Board; and

                  (xiii) all actions to be taken by the Seller in connection
            with consummation of the transactions contemplated hereby and all
            certificates, opinions, instruments, and other documents required to
            effect the transactions contemplated hereby will be reasonably
            satisfactory in form and substance to the Purchasers.

                  (xiv) Prior to the Closing, the Company shall cause to be
            prepared the Company's audited financial statements for the fiscal
            year ended December 31, 2004 and shall have filed with the U.S.
            Securities and Exchange Commission prior to the Closing the
            Company's Form 10-KSB for the period ended December 31, 2004. The
            costs of such audit and preparation and filing of the Form 10-KSB
            shall be at the sole expense of the Company. Christopher Kern
            ("Kern") shall remain an officer of the Company until the Form
            10-KSB has been completed and filed with the U.S. Securities and
            Exchange Commission. Kern agrees to execute the Form 10-KSB on
            behalf of the Company, together with all SOX certifications required
            to be submitted therewith and any management representation letters
            required in connection with the audit.

                                       13
<PAGE>

      The Purchasers may waive any condition specified in this Section 12(a) at
or prior to the Closing in writing executed by the Purchasers.

            (b) Conditions to Obligation of the Seller.

      The obligations of the Sellers to consummate the transactions to be
performed by it in connection with the Closing are subject to satisfaction of
the following conditions:

                  (i) the representations and warranties set forth in Section 7
            above shall be true and correct in all material respects at and as
            of the Closing Date;

                  (ii) the Purchasers shall have performed and complied with all
            of its covenants hereunder in all material respects through the
            Closing;

                  (iii) no action, suit, or proceeding shall be pending or
            threatened before any court or quasi-judicial or administrative
            agency of any federal, state, local, or foreign jurisdiction or
            before any arbitrator wherein an unfavorable injunction, judgment,
            order, decree, ruling, or charge would (A) prevent consummation of
            any of the transactions contemplated by this Agreement or (B) cause
            any of the transactions contemplated by this Agreement to be
            rescinded following consummation (and no such injunction, judgment,
            order, decree, ruling, or charge shall be in effect);

                  (iv) the Purchasers shall have delivered to the Sellers a
            certificate to the effect that each of the conditions specified
            above in Section 12(b)(i)-(iii) is satisfied in all respects;

                  (v) all actions to be taken by the Purchasers in connection
            with consummation of the transactions contemplated hereby and all
            certificates, opinions, instruments, and other documents required to
            effect the transactions contemplated hereby will be satisfactory in
            form and substance to the Seller.

      The Sellers may waive any condition specified in this Section 12(b) at or
prior to the Closing in writing executed by the Seller.

                                       14
<PAGE>

13.   Remedies for Breaches of This Agreement.

            (a) Survival of Representations and Warranties. All of the
      representations and warranties of the Parties shall survive the Closing
      hereunder and continue in full force and effect for a period of one year
      (1) thereafter. Notwithstanding, such time limitation shall not be
      applicable if a Party had actual knowledge or had substantial and
      verifiable reason to know of any material fraudulent misrepresentation or
      warranty which is the subject of any claim by any other Party at the time
      of Closing, in which case such representation or warranty shall be deemed
      to have survived the Closing for a period of three (3) years thereafter.

            (b) Indemnification Provisions for Benefit of the Purchasers.

                  (i) In the event any Seller breaches (or in the event any
            third party alleges facts that, if true, would mean any Seller has
            breached) any of its representations, warranties, and covenants
            contained herein, and, if there is an applicable survival period
            pursuant to Section 13(a) above, provided that the Purchasers make a
            written claim for indemnification against the Sellers within such
            survival period, then the Sellers shall jointly and severally
            indemnify the Purchasers from and against the entirety of any
            Adverse Consequences the Purchasers may suffer through and after the
            date of the claim for indemnification (including any Adverse
            Consequences the Purchasers may suffer after the end of any
            applicable survival period) resulting from, arising out of, relating
            to, in the nature of, or caused by the breach (or the alleged
            breach). For purposes of this Agreement, "Adverse Consequences"
            means all actions, suits, proceedings, hearings, investigations,
            charges, complaints, claims, demands, injunctions, judgments,
            orders, decrees, rulings, damages, dues, penalties, fines, costs,
            amounts paid in settlement, Liabilities, obligations, taxes, Liens,
            losses, lost value, expenses, and fees, including court costs and
            attorneys' fees and expenses.

                  (ii) The Sellers shall indemnify the Purchasers from and
            against the entirety of any Adverse Consequences the Purchasers may
            suffer resulting from, arising out of, relating to, in the nature
            of, or caused by any Liability of the Company (whether or not
            accrued or otherwise disclosed) (x) for any taxes of the Company
            with respect to any tax year or portion thereof ending on or before
            the Closing Date (or for any Tax year beginning before and ending
            after the Closing Date to the extent allocable to the portion of
            such period beginning before and ending on the Closing Date) and (y)
            for the unpaid taxes of any Person (other than the Company) under
            Section 1.1502-6 of the Regulations adopted under the Code (or any
            similar provision of state, local, or foreign law), as a transferee
            or successor, by contract, or otherwise.

                                       15
<PAGE>

                  (iii) The Sellers shall indemnify the Purchasers from and
            against the entirety of any Liabilities arising out of the ownership
            of the Seller Shares, the Note or operation of the Company prior to
            the Closing.

                  (iv) The Sellers shall indemnify the Purchasers from and
            against the entirety of any Adverse Consequences the Purchasers may
            suffer resulting from, arising out of, relating to, in the nature
            of, or caused by any indebtedness or other Liabilities of the
            Company existing as of the Closing Date.

                  (v) The maximum liability of the Sellers for indemnification
            under this Agreement shall in no event exceed an amount equal to the
            Purchase Price. Notwithstanding, such maximum liability limitation
            shall not be applicable if a Party had actual knowledge or had
            substantial and verifiable reason to know of any material fraudulent
            misrepresentation or warranty which is the subject of any claim by
            any other Party at the time of Closing.

            (c) Indemnification Provisions for Benefit of the Seller. In the
      event the Purchasers breach (or in the event any third party alleges facts
      that, if true, would mean the Purchasers has breached) any of its
      representations, warranties, and covenants contained herein, and, if there
      is an applicable survival period pursuant to Section 13(a) above, provided
      that the Seller makes a written claim for indemnification against the
      Purchasers within such survival period, then the Purchasers shall
      indemnify the Seller from and against the entirety of any Adverse
      Consequences the Seller may suffer through and after the date of the claim
      for indemnification (including any Adverse Consequences the Seller may
      suffer after the end of any applicable survival period) resulting from,
      arising out of, relating to, in the nature of, or caused by the breach (or
      the alleged breach).

            (d) Matters Involving Third Parties.

                  (i) If any third party shall notify any Party (the
            "Indemnified Party") with respect to any matter (a "Third Party
            Claim") which may give rise to a claim for indemnification against
            any other Party (the "Indemnifying Party") under this Section 13,
            then the Indemnified Party shall promptly notify each Indemnifying
            Party thereof in writing; provided, however, that no delay on the
            part of the Indemnified Party in notifying any Indemnifying Party
            shall relieve the Indemnifying Party from any obligation hereunder
            unless (and then solely to the extent) the Indemnifying Party
            thereby is prejudiced.

                  (ii) Any Indemnifying Party will have the right to defend the
            Indemnified Party against the Third Party Claim with counsel of its
            choice reasonably satisfactory to the Indemnified Party so long as
            (A) the Indemnifying Party notifies the Indemnified Party in writing
            within 10 days after the Indemnified Party has given notice of the
            Third Party Claim that the Indemnifying Party will indemnify the
            Indemnified Party from and against the entirety of any Adverse
            Consequences the Indemnified Party may suffer resulting from,
            arising out of, relating to, in the nature of, or caused by the
            Third Party Claim, (B) the Indemnifying Party provides the
            Indemnified Party with evidence reasonably acceptable to the
            Indemnified Party that the Indemnifying Party will have the
            financial resources to defend against the Third Party Claim and
            fulfill its indemnification obligations hereunder, (C) the Third
            Party Claim involves only money damages and does not seek an
            injunction or other equitable relief, (D) settlement of, or an
            adverse judgment with respect to, the Third Party Claim is not, in
            the good faith judgment of the Indemnified Party, likely to
            establish a precedential custom or practice adverse to the
            continuing business interests of the Indemnified Party, and (E) the
            Indemnifying Party conducts the defense of the Third Party Claim
            actively and diligently.

                                       16
<PAGE>

                  (iii) So long as the Indemnifying Party is conducting the
            defense of the Third Party Claim in accordance with Section
            13(d)(ii) above, (A) the Indemnified Party may retain separate
            co-counsel at its sole cost and expense and participate in the
            defense of the Third Party Claim, (B) the Indemnified Party will not
            consent to the entry of any judgment or enter into any settlement
            with respect to the Third Party Claim without the prior written
            consent of the Indemnifying Party (not to be withheld unreasonably),
            and (C) the Indemnifying Party will not consent to the entry of any
            judgment or enter into any settlement with respect to the Third
            Party Claim without the prior written consent of the Indemnified
            Party (not to be withheld unreasonably).

                  (iv) In the event any of the conditions in Section 13(d)(ii)
            above is or becomes unsatisfied, however, (A) the Indemnified Party
            may defend against, and consent to the entry of any judgment or
            enter into any settlement with respect to, the Third Party Claim in
            any manner it reasonably may deem appropriate (and the Indemnified
            Party need not consult with, or obtain any consent from, any
            Indemnifying Party in connection therewith), (B) the Indemnifying
            Parties will reimburse the Indemnified Party promptly and
            periodically for the costs of defending against the Third Party
            Claim (including attorneys' fees and expenses), and (C) the
            Indemnifying Parties will remain responsible for any Adverse
            Consequences the Indemnified Party may suffer resulting from,
            arising out of, relating to, in the nature of, or caused by the
            Third Party Claim to the fullest extent provided in this Section 13.

14.   Termination.

            (a) Termination of Agreement. The Parties may terminate this
      Agreement as provided below:

            (b) the Purchasers and the Seller may terminate this Agreement by
      mutual written agreement at any time prior to the Closing;

                                       17
<PAGE>

            (c) the Purchasers may terminate this Agreement by giving written
      notice to the Seller at any time prior to the Closing if (A) the aggregate
      of the Company's Liabilities acquired by Purchasers, is equal to, or
      exceeds $1,000; (B) in the event the Seller has breached any material
      representation, warranty, or covenant contained in this Agreement in any
      material respect and the Purchasers has notified the Seller of the breach,
      and the breach has continued without cure for a period of 2 days after the
      notice of breach; or (C) = if the Closing shall not have occurred on or
      before March 4, 2005 by reason of the failure of any condition precedent
      under Section 12(a) hereof (unless the failure results primarily from the
      Purchasers themselves breaching any representation, warranty, or covenant
      contained in this Agreement); and

            (d) the Sellers may terminate this Agreement by giving written
      notice to the Purchasers at any time prior to the Closing (A) in the event
      the Purchasers has breached any material representation, warranty, or
      covenant contained in this Agreement in any material respect, the Sellers
      have notified the Purchasers of the breach, and the breach has continued
      without cure for a period of 2 days after the notice of breach or (B) if
      the Closing shall not have occurred on or before March 4, 2005, by reason
      of the failure of any condition precedent under Section 12(b) hereof
      (unless the failure results primarily from the Sellers themselves
      breaching any representation, warranty, or covenant contained in this
      Agreement).

            (e) Effect of Termination. The Sellers shall in no event be
      permitted to terminate this Agreement unless prior to or accompanying any
      notice of termination delivered hereunder the Sellers (i) have delivered
      to the Purchasers any portion of the Purchase Price theretofore paid by
      the Purchasers, excluding the Cash Deposit, and (ii) have notified the Law
      Firm in writing that any amounts held in escrow by it may released to the
      Purchasers. If the Purchasers terminate this Agreement pursuant to this
      Section 14, then the Sellers shall immediately pay to the Purchasers any
      portion of the Purchase Price theretofore paid by the Purchasers and the
      Sellers shall immediately notify the Law Firm in writing that any amounts
      held in escrow by it may released to the Purchasers. Except as aforesaid,
      if this Agreement terminates pursuant to this Section 14, all rights and
      obligations of the Parties hereunder shall terminate without any Liability
      of any Party to any other Party, except for any Liability of a Party that
      is then in breach.

            (f) Termination for Cause. In the event that the transaction would
      have closed but for the failure of the other party to close, then the
      party at fault shall reimburse the not at fault party for its documented
      reasonable legal fees and related out-of-pocket expenses it has incurred
      in connection with the transaction not to exceed a maximum of $15,000.00.
      The parties agree that any damages payable on account of any breach of
      this Agreement shall be expressly limited to such amount.

                                       18
<PAGE>

15.   Miscellaneous.

            (a) Facsimile Execution and Delivery. Facsimile execution and
      delivery of this Agreement is legal, valid and binding execution and
      delivery for all purposes.

            (b) Confidentiality; Press Releases and Public Announcements. Except
      as and to the extent required by law, no Party will disclose or use and
      will direct its representatives not to disclose or use any information
      with respect to the transaction which is the subject to this Agreement,
      without the consent of the other Parties. Neither the Sellers nor the
      Company shall issue any press release or make any public announcement
      relating to the subject matter of this Agreement without the prior written
      approval of the Purchasers; provided, however, that the Company may make
      any public disclosure it believes in good faith is required by applicable
      law or any listing or trading agreement concerning its publicly-traded
      securities (in which case the Sellers and the Company will use their best
      efforts to advise the other Parties prior to making the disclosure).

            (c) No Third-Party Beneficiaries. This Agreement shall not confer
      any rights or remedies upon any person other than the Parties and their
      respective successors and permitted assigns.

            (d) Entire Agreement. This Agreement (including the documents
      referred to herein) constitutes the entire agreement among the Parties and
      supersedes any prior understandings, agreements, or representations by or
      among the Parties, written or oral, to the extent they related in any way
      to the subject matter hereof.

            (e) Succession and Assignment. This Agreement shall be binding upon
      and inure to the benefit of the Parties named herein and their respective
      successors and permitted assigns. No Party may assign either this
      Agreement or any of his or its rights, interests, or obligations hereunder
      without the prior written approval of the Purchasers and the Sellers;
      provided, however, that the Purchasers may (i) assign any or all of its
      rights and interests hereunder to one or more of its Affiliates, and (ii)
      designate one or more of its Affiliates to perform its obligations
      hereunder, but no such assignment shall operate to release Purchasers or a
      successor from any obligation hereunder unless and only to the extent that
      Seller agrees in writing.

            (f) Counterparts. This Agreement may be executed in one or more
      counterparts, each of which shall be deemed an original but all of which
      together will constitute one and the same instrument.

            (g) Headings. The Section headings contained in this Agreement are
      inserted for convenience only and shall not affect in any way the meaning
      or interpretation of this Agreement.

            (h) Notices. All notices, requests, demands, claims, and other
      communications hereunder will be in writing. Any notice, request, demand,
      claim, or other communication hereunder shall be deemed duly given if (and
      then two business days after) it is sent by registered or certified mail,
      return receipt requested, postage prepaid, and addressed to the intended
      recipient as set forth below:

                                       19
<PAGE>

         If to the Sellers (or the Company prior to the Closing):

         Internet Finance International Corp.
         1175 Walt Whitman Road
         Melville, NY 11747
         (631) 424-9009

         Fax (631) 424-9010

         If to the Purchasers:

         Peter C. Zachariou
         c/o Q Management, Inc.
         180 Varick Street
         13th Floor
         New York, NY 10014
         (212) 807-6994
         Fax (212) 807-8999

         With copy to:

         Robert Diener
         122 Ocean Park Blvd.
         Suite 307
         Santa Monica, CA 90405
         (310) 396-1691 Fax (310) 396-8608

      Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.

                                       20
<PAGE>

            (i) Governing Law. This Agreement shall be governed by and construed
      in accordance with the domestic laws of the State of New York without
      giving effect to any choice or conflict of law provision or rule (whether
      of the State of New York or any other jurisdiction) that would cause the
      application of the laws of any jurisdiction other than the State of New
      York.

            (j) Amendments and Waivers. No amendment of any provision of this
      Agreement shall be valid unless the same shall be in writing and signed by
      the Purchasers and the Sellers or their respective representatives. No
      waiver by any Party of any default, misrepresentation, or breach of
      warranty or covenant hereunder, whether intentional or not, shall be
      deemed to extend to any prior or subsequent default, misrepresentation, or
      breach of warranty or covenant hereunder or affect in any way any rights
      arising by virtue of any prior or subsequent such occurrence.

            (k) Severability. Any term or provision of this Agreement that is
      invalid or unenforceable in any situation in any jurisdiction shall not
      affect the validity or enforceability of the remaining terms and
      provisions hereof or the validity or enforceability of the offending term
      or provision in any other situation or in any other jurisdiction.

            (l) Expenses. Each of the Parties and the Company will bear his or
      its own costs and expenses (including legal fees and expenses) incurred in
      connection with this Agreement and the transactions contemplated hereby,
      except for payment of the Legal Fees. The Sellers agree that the Company
      has not borne or will not bear any of the Sellers' costs and expenses
      (including any of his legal fees and expenses) in connection with this
      Agreement or any of the transactions contemplated hereby.

            (m) Construction. The Parties have participated jointly in the
      negotiation and drafting of this Agreement. In the event an ambiguity or
      question of intent or interpretation arises, this Agreement shall be
      construed as if drafted jointly by the Parties and no presumption or
      burden of proof shall arise favoring or disfavoring any Party by virtue of
      the authorship of any of the provisions of this Agreement. Any reference
      to any federal, state or local statute or law shall be deemed also to
      refer to all rules and regulations promulgated thereunder, unless the
      context requires otherwise. The word "including" shall mean including
      without limitation. The Parties intend that each representation, warranty,
      and covenant contained herein shall have independent significance. If any
      Party has breached any representation, warranty, or covenant contained
      herein in any respect, the fact that there exists another representation,
      warranty, or covenant relating to the same subject matter (regardless of
      the relative levels of specificity) which the Party has not breached shall
      not detract from or mitigate the fact that the Party is in breach of the
      first representation, warranty, or covenant. Nothing in the disclosure
      Schedules attached hereto shall be deemed adequate to disclose an
      exception to a representation or warranty made herein, however, unless the
      disclosure Schedules identifies the exception with particularity and
      describes the relevant facts in detail. Without limiting the generality of
      the foregoing, the mere listing (or inclusion of a copy) of a document or
      other item in the disclosure Schedules or supplied in connection with the
      Purchasers' due diligence review, shall not be deemed adequate to disclose
      an exception to a representation or warranty made herein (unless the
      representation or warranty has to do with the existence of the document or
      other item itself).

                                       21
<PAGE>

            (n) Incorporation of Exhibits and Schedules. The Exhibits and
      Schedules identified in this Agreement are incorporated herein by
      reference and made a part hereof.

            (o) Specific Performance. Each of the Parties acknowledges and
      agrees that the other Parties would be damaged irreparably in the event
      any of the provisions of this Agreement are not performed in accordance
      with their specific terms or otherwise are breached. Accordingly, each of
      the Parties agrees that the other Parties shall be entitled to an
      injunction or injunctions to prevent breaches of the provisions of this
      Agreement and to enforce specifically this Agreement and the terms and
      provisions hereof in any action instituted in any court of the United
      States or any state thereof having jurisdiction over the Parties and the
      matter (subject to the provisions set forth in Section 15(p) below), in
      addition to any other remedy to which they may be entitled, at law or in
      equity.

            (p) Submission to Jurisdiction. Each of the Parties submits to the
      jurisdiction of any state or federal court sitting in New York County, New
      York, in any action or proceeding arising out of or relating to this
      Agreement and agrees that all claims in respect of the action or
      proceeding may be heard and determined in any such court. Each of the
      Parties waives any defense of inconvenient forum to the maintenance of any
      action or proceeding so brought and waives any bond, surety, or other
      security that might be required of any other Party with respect thereto.
      Any Party may make service on any other Party by sending or delivering a
      copy of the process to the Party to be served at the address and in the
      manner provided for the giving of notices in Section 15(h) above. Nothing
      in this Section 15(p), however, shall affect the right of any Party to
      bring any action or proceeding arising out of or relating to this
      Agreement in any other court or to serve legal process in any other manner
      permitted by law or at equity. Each Party agrees that a final judgment in
      any action or proceeding so brought shall be conclusive and may be
      enforced by suit on the judgment or in any other manner provided by law or
      at equity.

                            [signature pages follow]
..

                                       22
<PAGE>

                             [SELLER SIGNATURE PAGE]

      IN WITNESS WHEREOF, each of the undersigned SELLERS has duly executed this
Agreement the date first above written.

                                  FOR ENTITIES:

                                            Internet Finance International Corp.
                                            (Insert Name of entity above)

                                            By:      /s/ Chris Kern
                                               ---------------------------------
                                                     Name: Chris Kern
                                                     Title: President

                                       23
<PAGE>

                           [PURCHASER SIGNATURE PAGE]

      IN WITNESS WHEREOF, each of the undersigned PURCHASERS has duly executed
this Agreement the date first above written.

                                            FOR ENTITIES:

                                            Gaha Ventures, LLC
                                            (Insert Name of entity above)

                                            By:      /s/ Jodi Kirsch
                                               ---------------------------------
                                                     Name:  Jodi Kirsch
                                                     Title:   President

                                            Altitude Group, Inc.
                                            (Insert Name of entity above)

                                            By:      /s/ Michael Kreizman
                                               ---------------------------------
                                                     Name:  Dr. Michael Kreizman
                                                     Title:   President

                                            Fountainhead Investments, Inc.
                                            (Insert Name of entity above)

                                            By:      /s/ Peter Zachariou
                                               ---------------------------------
                                                     Name:  Peter Zachariou
                                                     Title:   President

                                            FOR INDIVIDUALS:

                                                     /s/ David Cantor
                                               ---------------------------------
                                                     Name: David Cantor

                                       24
<PAGE>

                            [COMPANY SIGNATURE PAGE]

      IN WITNESS WHEREOF, the COMPANY has duly executed this Agreement the date
first above written.

                                             CASTLE & MORGAN HOLDINGS, INC.
                                             A Delaware corporation

                                             By:      /s/ Chris Kern
                                                --------------------------------
                                                      Name: Chris Kern
                                                      Title: President

                                       25
<PAGE>

     [SIGNATURE PAGE FOR SELLER REPRESENTATIVE AND PURCHASER REPRESENTATIVE]

      IN WITNESS WHEREOF, each of the undersigned REPRESENTATIVES has duly
executed this Agreement WITH RESPECT TO THE OBLIGATIONS SET FORTH IN SECTION 4
OF THIS AGREEMENT ONLY as of the date first above written.

                                             SELLER REPRESENTATIVE:

                                                     /s/ Chris Kern
                                             -----------------------------------
                                             Name:  Christopher Kern

                                             PURCHASER REPRESENTATIVE:

                                                     /s/ Peter C. Zachariou
                                             -----------------------------------
                                             Name:  Peter C. Zachariou

                                       26
<PAGE>

                                       27

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