Document:

Unassociated Document

    
      EXHIBIT
        10.1

    

     

    

    

    

    USTELEMATICS,
      INC.

    

    SECURITIES
      PURCHASE AGREEMENT

    

    December
      6, 2006 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      TABLE OF CONTENTS

    

    

    
      	ARTICLE
              I DEFINITIONS	
              1

            
	
              1.1 
                 Definitions
                

            	
              1

            
	 	 	 	
               

            
	ARTICLE
              II PURCHASE AND SALE	
              6

            
	
              2.1
                 

            	 	
              Closing
                

            	
              6

            
	
              2.2  
                

            	
               

            	
              Deliveries

            	
              7

            
	
              2.3  
                

            	 	
              Closing
                Conditions

            	
              8

            
	 	 	 	
               

            
	
              ARTICLE
                III REPRESENTATIONS AND WARRANTIES

            	
              9

            
	
              3.1  
                

            	 	
              Representations
                and Warranties of the Company

            	
              9

            
	
              3.2  
                

            	 	
              Representations
                and Warranties of the Purchasers

            	
              23

            
	 	 	 	 
	ARTICLE
              IV OTHER AGREEMENTS OF THE PARTIES	
              25

            
	
              4.1  
                

            	 	
              Transfer
                Restrictions

            	
              25

            
	
              4.2  
                

            	 	
              Key
                Man Life Insurance

            	
              26

            
	
              4.3  
                

            	 	
              Furnishing
                of Information

            	
              26

            
	
              4.4  
                

            	 	
              Integration

            	
              26

            
	
              4.5  
                

            	 	
              Exchange
                With Holders of Existing Bridge Debentures

            	
              26

            
	
               
                4.6   

            	 	
              Securities
                Laws Disclosure; Publicity

            	
              28

            
	
              4.7  
                

            	 	
              Shareholder
                Rights Plan

            	
              28

            
	
              4.8  
                

            	 	
              Non-Public
                Information

            	
              28

            
	
              4.9  
                

            	 	
              Use
                of Proceeds

            	
              28

            
	
              4.10
                

            	 	
              Reimbursement

            	
              29

            
	
              4.11
                

            	
               

            	
              Indemnification
                of Purchasers

            	
              29

            
	
              4.12
                

            	 	
              Reservation
                and Listing of Common Stock

            	
              30

            
	
              4.13

            	 	
              Participation
                in Future Financing

            	
              30

            
	
              4.14

            	 	
              Subsequent
                Equity Sales

            	
              31

            
	
              4.15

            	 	
              Equal
                Treatment of Purchasers

            	
              32

            
	
              4.16

            	 	
              Priority
                of Investment

            	
              32

            
	
              4.17

            	
               

            	
              Reporting
                Requirements

            	
              32

            
	
              4.18

            	 	
              Accountants

            	
              34

            
	
              4.19

            	 	
              Access
                to Records

            	
              34

            
	
              4.20

            	 	
              Board
                of Directors

            	
              34

            
	
              4.21

            	 	
              Maintenance
                of Property

            	
              34

            
	
              4.22

            	 	
              Litigation

            	
              34

            
	
              4.23

            	 	
              Preservation
                of Corporate Existence

            	
              34

            
	
              4.24

            	 	
              Brokers

            	
              34

            
	
              4.25

            	 	
              Conversion

            	
              35

            
	
              4.26

            	 	
              Preemptive
                Right/Right of First Refusal

            	
              39

            
	
              4.27

            	 	
              Notices

            	
              40

            
	
              4.28

            	 	
              Confidentiality
                of Identification of Holders

            	
              40

            
	
              4.29

            	 	
              Notice
                of Stop Options

            	
              40

            
	
              4.30

            	 	
              No
                Interest in Excess of Legal Rate

            	
              40

            
	
              4.31

            	 	
              Injunction
                of Posting of Bond

            	
              40

            
	
              4.32

            	 	
              Buy-In

            	
              40

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    

    
      
        TABLE
          OF CONTENTS

      

    

    

    
      	ARTICLE
              V MISCELLANEOUS	
              41

            
	
              5.1  
                

            	 	
              Termination

            	
              41

            
	
              5.2  
                

            	 	
              Fees
                and Expenses

            	
              41

            
	
              5.3  
                

            	 	
              Entire
                Agreement

            	
              41

            
	
              5.4  
                

            	 	
              Notices

            	
              41

            
	
              5.5  
                

            	 	
              Amendments;
                Waivers

            	
              42

            
	
              5.6  
                

            	 	
              Headings

            	
              42

            
	
              5.7  

            	  	
              Successors
                and Assigns

            	
              42

            
	
              5.8  
                

            	 	
              No
                Third-Party Beneficiaries

            	
              42

            
	
              5.9  
                

            	 	
              Governing
                Law

            	
              42

            
	
              5.10

            	 	
              Survival

            	
              43

            
	
              5.11

            	 	
              Execution

            	
              43

            
	
              5.12

            	 	
              Severability

            	
              43

            
	
              5.13

            	 	
              Rescission
                and Withdrawal Right

            	
              43

            
	
              5.14

            	 	
              Replacement
                of Securities

            	
              43

            
	
              5.15

            	 	
              Remedies

            	
              43

            
	
              5.16

            	 	
              Payment
                Set Aside

            	
              44

            
	
              5.17

            	 	
              Usury

            	
              44

            
	
              5.18

            	 	
              Independent
                Nature of Purchasers’ Obligations and Rights

            	
              44

            
	
              5.19

            	 	
              Liquidated
                Damages

            	
              45

            
	
              5.20

            	 	
              Construction

            	
              45

            

    

     

    
      	
              DISCLOSURE
                SCHEDULES

            
	 
	
              Schedule
                3.1(a)—Subsidiaries

            
	
              Schedule
                3.1(g)—Capitalization

            
	
              Schedule
                3.1(h)—Financial
                Statements

            
	
              Schedule
                3.1(m)—Regulatory
                Permits

            
	
              Schedule
                3.1(o)—Agreements,
                Patents, Trademarks and Copyrights

            
	
              Schedule
                3.1(q)—Transactions
                With Affiliates and Employees

            
	
              Schedule
                3.1(s)—Company
                Fees

            
	
              Schedule
                3.1(dd)—Company
                Accountants

            
	
              Schedule
                3.1(ee)—Company
                Indebtedness

            
	
              Schedule
                3.1(hh)—Manufacturing
                and Marketing Rights

            
	
              Schedule
                3.1(ii)—Company
                Employees

            
	
              Schedule
                3.1(kk)—Environmental
                and Safety Laws

            
	
              Schedule
                3.1(nn)—Accounts
                Receivable

            
	
              Schedule
                3.1(pp)—ERISA
                Benefits

            
	
              Schedule
                3.1(qq)—Material
                Agreements

            
	
              Schedule
                4.9 —Use
                of Proceeds

            
	
              Schedule
                4.24
                -Broker Compensation

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    
      	
              EXHIBIT
                A—9%
                Secured Debenture

            
	
              EXHIBIT
                B—Funds
                Escrow Agreement

            
	
              EXHIBIT
                C—Form
                of Opinion of Counsel

            
	
              EXHIBIT
                D—Security
                Agreement

            
	
              EXHIBIT
                E—Lock
                Up Agreement

            
	
              EXHIBIT
                F—Collateral
                Agent Agreement

            
	
              EXHIBIT
                G—Form
                of Series A Warrant

            
	
              EXHIBIT
                H—Form
                of Series B Warrant

            
	
              EXHIBIT
                I—Form
                of Exchange Bonus Warrant

            
	
              EXHIBIT
                J—Registration
                Rights Agreement

            
	 
	
              ANNEX
                A—Closing
                Statement

            
	
              ANNEX
                B—Confidential
                Subscriber Questionnaire

            

    

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of December 6, 2006, 2006 among USTelematics, Inc., a Delaware
      corporation (formerly known as Mobilier, Inc.) (the “Company”),
      each
      purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”)
      and
      each exchanging owner of Bridge Debentures (as defined herein)(each Purchaser
      and each such exchanging owner, including its successors and assigns a
“Holder”
and,
      collectively, the “Holders”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended and Rule 506 promulgated
      thereunder, the Company desires to (i) issue and sell to each Purchaser, and
      each Purchaser, severally and not jointly, desires to purchase from the Company,
      securities of the Company and (ii) exchange the outstanding Bridge Debentures
      for other newly issued securities of the Company, in each case, as more fully
      described in this Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Holder agree as
      follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    1.1 Definitions.
      In
      addition to the terms defined elsewhere in this Agreement: (a) capitalized
      terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Debentures (as defined herein), and (b) the following terms have the
      meanings indicated in this Section 1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(j).

     

    “Additional
      Stock”
shall
      have the meaning ascribed to such term in Section 4.25(d).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities
      Act.
      With
      respect to a Holder, any investment fund or managed account that is managed
      on a
      discretionary basis by the same investment manager as such Holder will be deemed
      to be an Affiliate of such Holder.

     

    “Bridge
      Debentures”
means
      the $1,500,000 aggregate principal amount of 10% Secured Debentures due October
      14, 2006 of the Company issued on or after April 14, 2006.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Broker”
means
      Axiom Capital Management, Inc. a registered broker/dealer in good standing
      with
      the National Association of Securities Dealers, Inc., with offices at 780 Third
      Avenue, 43rd
      Floor,
      New York, NY 10017, Telephone: (212) 521-3800, Fax: (212) 521-3888; attention:
      Mark Martino, email: mmartino@axiomcapital.com.

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday in the United States or a day on which banking institutions in the
      State
      of New York are authorized or required by law or other government action to
      close. 

     

    “Closing”
means
      the completion of the purchase and sale of the Securities pursuant to Section
      2.1, which shall occur on or after the Closing Date.

     

    “Closing
      Date”
means
      the Business Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    “Collateral
      Agent Agreement”
shall
      mean the Collateral Agent Agreement in substantially the form of Exhibit
      F
      hereto
      executed and delivered contemporaneously with this Agreement.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.0001 per share, and any other
      class of securities into which such securities may hereafter have been
      reclassified or changed into.

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

     

    “Company
      Counsel”
means
      Alan W. Peryam, LLC, 1120 Lincoln Street, Suite 1000, Denver, CO 80203,
      Telephone: (303) 866-0900, Fax: (303) 866-0999; email:
      alan@awperyam.com.

     

    “Conversion
      Price”
means
      the Exchange Debenture Conversion Price or the Purchased Debenture Conversion
      Price, as applicable.

     

    “Conversion
      Rate”
means
      the number of shares of Common Stock for which the applicable Debenture may
      be
      converted at any time at the applicable Conversion Price.

     

    “Conversion
      Right”
means
      the right to convert a Debenture into Common Stock as described in Section
      4.25.

     

    “Debentures”
means
      the Purchased Debentures and the Exchange Debentures.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Disclosure
      Schedules”
shall
      have the meaning ascribed to such term in Section 3.1.

     

    “Escrow
      Agent”
shall
      have the meaning set forth in the Escrow Agreement.

    

    “Escrow
      Agreement”
shall
      mean the Escrow Agreement dated as of December 6, 2006, by and among the
      Company, and Wollmuth Maher & Deutsch, LLP, as escrow agent, a copy of which
      is attached as Exhibit
      B
      hereto,
      together with any amendments agreed upon by the parties thereto.

    

    “Exchange”
means
      the delivery of the Exchange Debentures, Series A Warrants, Series B Warrants
      and Exchange Bonus Warrants in exchange for the Bridge Debentures as described
      in Section 4.5.

    

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    

    “Exchange
      Bonus Warrants”
means
      Common Stock purchase warrants to be issued to the holders of the Bridge
      Debentures in connection with the Exchange. Each Exchange Bonus Warrant will
      be
      exercisable for five years from the Closing for one share of Common Stock.
      Each
      holder of Bridge Debentures will receive one Exchange Bonus Warrant for each
      four shares of Common Stock which would be issued at the time of the Exchange,
      assuming the complete conversion of the Exchange Debenture at the Conversion
      Price of the Exchange Debentures then in effect ($0.375 per share on the date
      hereof). The exercise price of the Exchange Bonus Warrants shall be equal to
      the
      Exchange Debenture Conversion Price. The Exchange Bonus Warrants shall be in
      the
      form and have the terms and provisions set forth in Exhibit
      I,
      and
      shall provide rights and benefits equivalent to the Series A and Series B
      Warrants.

    

    “Exchange
      Debenture Conversion Price”
means
      the price at which the principal amount and any accrued unpaid interest on
      the
      Exchange Debentures may be converted into Common Stock. The Exchange Debenture
      Conversion Price shall be, at all times, 75% of the Purchased Debenture
      Conversion Price. 

    

    “Exchange
      Debentures”
means
      the debentures to be issued in exchange for Bridge Debentures at the Closing
      which will be identical to and carry the same rights as the Purchased Debentures
      except that the Conversion Price of the Exchange Debentures shall be, at all
      times, 75% of the Conversion Price of the Debentures.

    

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan unanimously
      adopted by the Board of Directors of the Company or a majority of the members
      of
      a committee of directors established for such purpose, (b) securities upon
      the
      exercise of or conversion of any Securities issued hereunder, convertible
      securities, options or warrants issued and outstanding on the date of this
      Agreement, provided that such securities have not been amended since the date
      of
      this Agreement to increase the number of such securities or to decrease the
      exercise or conversion price of any such securities, (c) securities issued
      pursuant to acquisitions or strategic transactions, provided any such issuance
      shall only be to a non-affiliated Person which is, itself or through its
      subsidiaries, an operating company in a business synergistic with the business
      of the Company and in which the Company receives benefits in addition to the
      investment of funds, but shall not include a transaction in which the Company
      is
      issuing securities primarily for the purpose of raising capital or to an entity
      whose primary business is investing in securities, and (d) securities described
      on the Schedules hereto including compensation payable to the Broker for the
      transactions described in this Agreement and in connection with the issuance
      of
      the Bridge Debentures.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Fully-Diluted
      Outstanding Capital Stock”
means
      the sum of (i) the total number of then issued and outstanding shares of Common
      Stock and all other classes of capital stock of the Company, plus (ii) the
      total
      number of shares of all Common Stock and all other classes of capital stock
      of
      the Company into which all then issued and outstanding and fully-vested Common
      Stock Equivalents and other securities convertible, exchangeable or otherwise
      exercisable into other classes of capital stock of the Company may be converted,
      exchanged or otherwise exercised.

    

    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Government
      Entity”
shall
      have the meaning ascribed to such term in Section 4.22.

     

    “Holder
      Party”
shall
      have the meaning ascribed to such term in Section 4.11.

     

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction. 

     

    “Listing
      Date”
shall
      have the meaning ascribed to such term in Section 4.12(c).

     

    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(b).

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Maximum
      Rate”
shall
      have the meaning ascribed to such term in Section 5.17.

     

    “Participation
      Maximum”
shall
      have the meaning ascribed to such term in Section 4.13. 

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Pre-Notice”
shall
      have the meaning ascribed to such term in Section 4.13. 

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Purchased
      Debenture Conversion Price”
means
      the price at which the principal amount and any unpaid interest on the Purchased
      Debentures may be converted into Common Stock. The initial Purchased Debenture
      Conversion Price shall be $0.50 per share, subject to adjustment as described
      in
      Section 4.25.

     

    “Purchased
      Debentures”
means,
      the 9% Secured Debentures due December __, 2006, subject to the terms therein,
      to be issued by the Company to the Purchasers hereunder, in the form of
Exhibit A.

     

    “Purchased
      Securities”
means
      the Purchased Debentures and the Series A Warrants and Series B Warrants being
      purchased by the Purchasers.

    

    “Records”
means
      all documents, books, records and other information (including, without
      limitation, computer programs, tapes, disks, punch cards, data processing
      software and related property and rights) maintained with respect to the
      Company’s business.

    

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement in substantially the form of Exhibit
      J
      hereto.

    

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Securities”
means
      the Debentures, the Series A Warrants, the Series B Warrants and the Exchange
      Bonus Warrants.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder. 

     

    “Security
      Agreement”
means
      the Amended and Restated Security Agreement, dated the date hereof, among the
      Company and the Holders, in the form of Exhibit
      D
      attached
      hereto.

     

    “Security
      Documents”
shall
      mean the Security Agreement and any other documents and filing required
      thereunder in order to grant the Holders a first priority security interest
      in
      all of the assets of the Company, including all UCC-1 filing
      receipts.

     

    “Series
      A Warrants”
means
      the Warrants to purchase Common Stock having the terms, and in the form of
      Exhibit
      G
      attached
      hereto.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Series
      B Warrants”
means
      the Warrants to purchase Common Stock having the terms, and in the form of
      Exhibit
      H
      attached
      hereto.

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount
      to be
      paid for Purchased Securities purchased hereunder as specified below such
      Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States Dollars and in immediately available
      funds.

     

    “Subsequent
      Financing”
shall
      have the meaning ascribed to such term in Section 4.13.

     

    “Subsequent
      Financing Notice”
shall
      have the meaning ascribed to such term in Section 4.13. 

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

     

    “Trading
      Market”
means,
      as applicable, the following markets or exchanges on which the Common Stock
      is
      listed or quoted for trading on the date in question: the American Stock
      Exchange, the New York Stock Exchange, the Nasdaq National Market, the Nasdaq
      Capital Market or the OTC Bulletin Board.

     

    “Transaction
      Documents”
means
      this Agreement, the Securities, the Security Agreement, each of the documents
      attached as Exhibits to this Agreement, and any other documents or agreements
      executed in connection with the transactions contemplated
      hereunder.

     

    “Warrants”
means
      the Series A Warrants, the Series B Warrants and the Exchange Bonus
      Warrants.

     

    ARTICLE
      II

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      concurrent with the execution and delivery of this Agreement by the parties
      hereto, the Company agrees to sell, and the Purchasers agree to purchase in
      the
      aggregate, severally and not jointly, not less than $3,500,000 nor more than
      $4,500,000 principal amount of the Purchased Debentures, Series A Warrants
      to
      purchase not less than 7,000,000 shares nor more than 9,000,000 shares of Common
      Stock, and Series B Warrants to purchase not less than 3,500,000 shares nor
      more
      than 4,500,000 shares of Common Stock. Each Purchaser shall deliver to the
      Escrow Agent via wire transfer for immediately available funds equal to their
      Subscription Amount and the Company shall deliver to the Escrow Agent each
      Purchased Debenture as determined pursuant to Section 2.2(a) and the other
      items
      set forth in Section 2.2 issuable at the Closing. Upon satisfaction of the
      conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
      offices of the Broker, or such other location as the parties shall mutually
      agree.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
            	2.2	
              Deliveries.

            

    

     

    
      	 	
              (a)

            	
               

            	
              On
                the Closing Date, the Company shall deliver or cause to be delivered
                to
                each Purchaser the following:

            

    

     

    
      	 	
              (i)

            	
              this
                Agreement duly executed by the
                Company;

            

    

     

    
      	 	
              (ii)

            	
              a
                legal opinion of Company Counsel, in the form of Exhibit
                C
                attached hereto; 

            

    

     

    
      	 	
              (iii)

            	
              a
                Purchased Debenture with a principal amount equal to such Purchaser’s
                Subscription Amount, registered in the name of the Purchaser, duly
                executed by the Company;

            

    

     

    
      	 	
              (iv)

            	
              a
                Series A Warrant and a Series B Warrant registered in the name of
                the
                Purchaser, duly executed by the
                Company;

            

    

     

    
      	 	
              (v)

            	
              a
                copy of the Security Agreement duly executed by the
                Company;

            

    

     

    
      	
            	(vi)	
              a
                copy of the Escrow Agreement duly executed by the
                Company;

            

    

    

    
      	 	
              (vii)

            	
              a
                copy of the Collateral Agent Agreement duly executed by the Company;
                

            

    

    

    
      	 	
              (viii)

            	
              a
                copy of duly executed lock-up agreements, in the form of Exhibit E
                attached hereto, from each officer, director, employee, consultant
                and
                advisor of the Company and from each shareholder of the Company owning
                more than 5% of the issued and outstanding shares of Common Stock
                (or
                Common Stock Equivalents on a fully converted basis), who are identified
                on Schedule 2.2(a); and 

            

    

    

    
      	 	
              (ix)

            	
              a
                copy of the Registration Rights Agreement in the form of Exhibit
                J
                attached hereto, duly executed by the
                Company.

            

    

    

    
      	 	
              (b)

            	
              On
                the Closing Date, each Purchaser shall deliver or cause to be delivered
                to
                the Escrow Agent the following: 

            

    

     

    
      	 	
              (i)

            	
              this
                Agreement duly executed by such
                Purchaser;

            

    

     

    
      	 	
              (ii)

            	
              such
                Purchaser’s Subscription Amount by wire transfer to the accounts specified
                in the Escrow Agreement;

            

    

     

    
      	 	
              (iii)

            	
              a
                copy of the Security Agreement, duly executed by such
                Purchaser;

            

    

    

    
      	
            	(iv)	
              the
                Escrow Agreement duly executed by such Purchaser;
                

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (v)

            	
              the
                Collateral Agent Agreement duly executed by such Purchaser;
                and

            

    

    

    
      	 	
              (vi)

            	
              the
                Registration Rights Agreement duly executed by such Purchaser;
                

            

    

    

    
      	 	
              (vii)

            	
              a
                copy of the Confidential Subscriber Questionnaire completed and duly
                executed by such Purchaser.

            

    

     

    
      	
            	2.3	
              Closing
                Conditions. 

            

    

     

    
      	 	
              (a)

            	
               

            	
              The
                obligations of the Company hereunder in connection with the Closing
                are
                subject to the following conditions being
                met:

            

    

     

    
      	 	
              (i)

            	
              the
                accuracy in all material respects when made and on the Closing Date
                of the
                representations and warranties of the Purchasers contained
                herein;

            

    

     

    
      	 	
              (ii)

            	
              all
                obligations, covenants and agreements of the Purchasers required
                to be
                performed at or prior to the Closing Date shall have been performed;
                and

            

    

     

    
      	 	
              (iii)

            	
              the
                delivery by the Purchasers of the items set forth in Section 2.2(b)
                of
                this Agreement.

            

    

     

    
      	 	
              (b)

            	
              The
                respective obligations of the Purchasers hereunder in connection
                with the
                Closing are subject to the following conditions being
                met:

            

    

     

    
      	 	
              (i)

            	
              the
                accuracy in all material respects on the Closing Date of the
                representations and warranties of the Company contained
                herein;

            

    

     

    
      	 	
              (ii)

            	
              all
                obligations, covenants and agreements of the Company required to
                be
                performed at or prior to the Closing Date shall have been performed;
                

            

    

     

    
      	 	
              (iii)

            	
              the
                delivery by the Company of the items set forth in Section 2.2(a)
                of this
                Agreement; 

            

    

     

    
      	 	
              (iv)

            	
              there
                shall have been no event which could, or could reasonably be expected
                to,
                result in a Material Adverse Effect with respect to the Company since
                the
                date hereof; 

            

    

     

    
      	 	
              (v)

            	
              the
                Company shall have satisfied all obligations owed by it to the holders
                of
                outstanding Bridge Debentures, as described in Section 4.13 of the
                Securities Purchase Agreement among the Company (then known as “Mobilier,
                Inc.”) and such holders, dated as of April 14,
                2006;

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (vi)

            	
              the
                Common Stock shall have been registered under Section 12(g) of the
                Exchange Act and the Company shall be current as of the Closing Date
                with
                its reporting obligations under the Exchange Act;
                and

            

    

     

    
      	 	
              (vii)

            	
              from
                the date hereof to the Closing Date, there shall not have been a
                banking
                moratorium declared either by the United States or New York State
                authorities nor shall there have occurred any material outbreak or
                escalation of hostilities or other national or international calamity
                of
                such magnitude in its effect on, or any material adverse change in,
                any
                financial market which, in each case, in the reasonable judgment
                of such
                Purchaser, makes it impracticable or inadvisable to purchase the
                Purchased
                Debentures at the Closing.

            

    

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      Except
      as set forth under the corresponding section of the disclosure schedules
      delivered to the Holders concurrently herewith (the “Disclosure
      Schedules”),
      which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to each Holder as of the Closing
      Date.

     

    (a) Subsidiaries.
      All of
      the direct subsidiaries of the Company are set forth on Schedule
      3.1(a).
      The
      Company owns all of the capital stock or other equity interests of each
      Subsidiary free and clear of any Liens, and all the issued and outstanding
      shares of capital stock of each Subsidiary are validly issued and are fully
      paid, non-assessable and free of preemptive and similar rights to subscribe
      for
      or purchase securities. If the Company has no subsidiaries, then references
      in
      the Transaction Documents to the Subsidiaries will be disregarded.

     

    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or financial condition of the Company and the Subsidiaries, taken
      as a
      whole, or (iii) a material adverse effect on the Company’s ability to perform in
      any material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company. Each Transaction
      Document has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms except (i) as limited by applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally and (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies.

     

    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the other transactions contemplated
      thereby do not and will not: (i) conflict with or violate any provision of
      the
      Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
      or other organizational or charter documents, or (ii) conflict with, or
      constitute a default (or an event that with notice or lapse of time or both
      would become a default) under, result in the creation of any Lien upon any
      of
      the properties or assets of the Company or any Subsidiary, or give to others
      any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected, or
      (iii) conflict with or result in a violation of any law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which the Company or a Subsidiary is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of the Company or a Subsidiary is bound or affected; except
      in
      the case of each of clauses (ii) and (iii), such as could not have or reasonably
      be expected to result in a Material Adverse Effect.

     

    (e) Filings,
      Consents and Approvals.
      With
      the exception of its obligation to file a Current Report on Form 8-K pursuant
      to
      Item 3.02 thereof,
      the
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (f) Issuance
      of the Securities.
      The
      Securities have been duly authorized and, when issued and, in the case of the
      Purchased Securities, paid for in accordance with the applicable Transaction
      Documents, will be valid and binding obligations of the Company, enforceable
      against the Company in accordance with their terms except (i) as limited by
      applicable bankruptcy, insolvency, reorganization, moratorium and other laws
      of
      general application affecting enforcement of creditors’ rights generally and
      (ii) as limited by laws relating to the availability of specific performance,
      injunctive relief and other equitable remedies. The shares of Common Stock
      issuable upon conversion of the Debentures and exercise of the Warrants, when
      issued in accordance with the terms of the applicable Transaction Documents,
      will be validly issued, fully paid and nonassessable, free and clear of all
      Liens imposed by the Company. The Company has reserved from its duly authorized
      capital stock a number of shares of Common Stock for issuance upon conversion
      of
      the Debentures and exercise of the Warrants at least equal to the minimum amount
      required to satisfy such obligations on the date hereof. 

     

    (g) Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(g).
      Except
      for the holders of the outstanding Bridge Debentures, no Person has any right
      of
      first refusal, preemptive right, right of participation, or any similar right
      to
      participate in the transactions contemplated by the Transaction Documents.
      Except as a result of the issuance of the Securities or as set forth on
Schedule
      3.1(g),
      there
      are no outstanding options, warrants, script rights to subscribe to, calls
      or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock
      or
      Common Stock Equivalents. The issuance and sale of the Securities will not
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Purchasers) and will not result in a right of any holder
      of Company securities to adjust the exercise, conversion, exchange or reset
      price under such securities. All of the outstanding shares of capital stock
      of
      the Company are validly issued, fully paid and nonassessable, have been issued
      in compliance with all federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or similar
      rights to subscribe for or purchase securities. No further approval or
      authorization of any stockholder, the Board of Directors of the Company or
      others is required for the issuance and sale of the Securities. Except as
      disclosed in Schedule
      3.1(g),
      there
      are no stockholders agreements, voting agreements or other similar agreements
      with respect to the Company’s capital stock to which the Company is a party or,
      to the knowledge of the Company, between or among any of the Company’s
      stockholders. A complete list of stockholders of record, with their
      shareholdings as of the Closing Date, is included in Schedule
      3.1(g).

     

    (h) Financial
      Statements.
      The
      financial statements of the Company for the fiscal year ended May 31, 2006
      and
      unaudited statements as of August 31, 2006, are attached hereto as Schedule
      3.1(h).
      Such
      financial statements fairly present in all material respects the financial
      position of the Company and its consolidated subsidiaries, if any, as of and
      for
      the dates thereof and the results of operations and cash flows for the periods
      then ended, subject to normal, immaterial adjustments.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (i) Material
      Changes.
      Since
      the date of the Company’s most recent financial statements, attached hereto as
Schedule
      3.1(h),
      (i)
      there has been no event, occurrence or development that has had or that could
      reasonably be expected to result in a Material Adverse Effect, (ii) the Company
      has not incurred any liabilities (contingent or otherwise) other than (A) trade
      payables and accrued expenses incurred in the ordinary course of business
      consistent with past practice and (B) liabilities not required to be reflected
      in the Company’s financial statements pursuant to GAAP, (iii) the Company has
      not altered its method of accounting, (iv) the Company has not declared or
      made
      any dividend or distribution of cash or other property to its stockholders
      or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock and (v) the Company has not issued any equity securities
      to
      any officer, director or Affiliate, except as disclosed in Schedule 3.1(i).
      

     

    (j) Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
      officer thereof, is or has been the subject of any Action involving a claim
      of
      violation of or liability under federal or state securities laws or a claim
      of
      breach of fiduciary duty. There has not been, and to the knowledge of the
      Company, there is not pending or contemplated, any investigation by the
      Commission involving the Company or any current or former director or officer
      of
      the Company. 

     

    (k) Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company that could reasonably be
      expected to result in a Material Adverse Effect.

     

    (l) Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      except in each case as could not have a Material Adverse Effect.

     

    (m) Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as listed on
Schedule
      3.1(m),
      except
      where the failure to possess such permits could not have or reasonably be
      expected to result in a Material Adverse Effect (“Material
      Permits”),
      and
      neither the Company nor any Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any Material Permit.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (n) Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens that do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases of which the Company
      and the Subsidiaries are in compliance in all material respects.

     

    (o) Intellectual
      Property.

     

    (i) The
      term
“Intellectual
      Property Rights”
      includes:

     

    
      	 	
              (1)

            	
              the
                name of the Company, all fictional business names, trading names,
                registered and unregistered trademarks, service marks, and applications
                (collectively, “Marks’’);

            

    

     

    
      	 	
              (2)

            	
              all
                patents, patent applications, and inventions and discoveries that
                may be
                patentable (collectively, “Patents’’);

            

    

     

    
      	 	
              (3)

            	
              all
                copyrights in both published works and published works (collectively,
                “Copyrights”);
                

            

    

     

    
      	 	
              (4)

            	
              all
                rights in mask works (collectively, “Rights
                in Mask Works’’);
                and

            

    

     

    
      	 	
              (5)

            	
              all
                know-how, trade secrets, confidential information, customer lists,
                software, technical information, data, process technology, plans,
                drawings, and blue prints (collectively, “Trade
                Secrets’’);
                owned, used, or licensed by the Company as licensee or
                licensor.

            

    

     

    (ii) Agreements.
      Schedule
      3.1(o)
      contains
      a complete and accurate list and summary description including any royalties
      paid or received by the Company, of all contracts relating to the Intellectual
      Property Rights to which the Company is a party or by which the Company is
      bound, except for any license implied by the sale of a product and perpetual,
      paid-up licenses for commonly available software programs with a value of less
      than $2,500 under which the Company is the licensee. There are no outstanding
      and, to Company’s knowledge, no threatened disputes or disagreements with
      respect to any such agreement.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (iii) Know-How
      Necessary for the Business.
      The
      Intellectual Property Rights are all those necessary for the operation of the
      Company’s businesses as it is currently conducted or as reflected in the
      business plan given to the Purchaser. The Company is the owner of all right,
      title, and interest in and to each of the Intellectual Property Rights, free
      and
      clear of all liens, security interests, charges, encumbrances, equities, and
      other adverse claims, and has the right to use without payment to a third party
      all of the Intellectual Property Rights. Except as set forth in Schedule
      3.1(o),
      all
      former and current employees of the Company and inventors or creators of the
      Intellectual Property Rights have executed written contracts with the Company
      that assign to the Company all rights to any inventions, improvements,
      discoveries, or information relating to the business of the Company. To the
      Company’s knowledge, no employee of the Company has entered into any contract
      that restricts or limits in any way the scope or type of work in which the
      employee may be engaged or requires the employee to transfer, assign, or
      disclose information concerning his work to anyone other than of the
      Company.

     

    (iv) Patents.
      Schedule
      3.1(o)
      contains
      a complete and accurate list and summary description of all Patents. The Company
      is the owner of all right, title and interest in and to each of the Patents,
      free and clear of all liens, security interests, charges, encumbrances,
      entities, and other adverse claims. All of the issued Patents are currently
      in
      compliance with formal legal requirements (including payment of filing,
      examination, and maintenance fees and proofs of working or use), are valid
      and
      enforceable, and are not subject to any maintenance fees or taxes or actions
      falling due within ninety days after the Closing Date. No patent has been or
      is
      now involved in any interference, reissue, reexamination, or opposition
      proceeding. To the Company’s knowledge, there is no potentially interfering
      patent or patent application of any third party. No Patent is infringed or,
      to
      the Company’s knowledge, has been challenged or threatened in any way. To the
      Company’s knowledge, none of the products manufactured and sold, nor any process
      or know-how used, by the Company infringes or is alleged to infringe any patent
      or other proprietary right of any other Person. All products made, used, or
      sold
      under the Patents have been marked with the proper patent notice.

     

    (v) Trademarks.
      Schedule
      3.1(o)
      contains
      a complete and accurate list and summary description of all Marks. The Company
      is the owner of all right, title, and interest in and to each of the Marks,
      free
      and clear of all liens, security interests. charges, encumbrances, equities,
      and
      other adverse claims. All Marks that have been registered with the United States
      Patent and Trademark Office are currently in compliance with all formal legal
      requirements (including the timely post-registration tiling of affidavits of
      use
      and incontestability and renewal applications), are valid and enforceable,
      and
      are not subject to any maintenance fees or taxes or actions falling due within
      ninety days after the Closing Date. No Mark has been or is now involved in
      any
      opposition, invalidation, or cancellation and, to the Company’s knowledge, no
      such action is threatened with respect to any of the Marks. To the Company’s
      knowledge, there is no potentially interfering trademark or trademark
      application of any third party. No Mark is infringed or, to the Company’s
      knowledge, has been challenged or threatened in any way. To the Company’s
      knowledge, none of the Marks used by the Company infringes or is alleged to
      infringe any trade name, trademark, or service mark of any third party. All
      products and materials containing a Mark bear the proper federal registration
      notice where permitted by law.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (vi) Copyrights.
      Schedule
      3.1(o)
      contains
      a complete and accurate list and summary description of all Copyrights. The
      Company is the owner of all right, title, and interest in and to each of the
      Copyrights, free and clear of all liens, security interests, charges,
      encumbrances, equities, and other adverse claims. All the Copyrights have been
      registered and are currently in compliance with formal requirements, are valid
      and enforceable, and are not subject to any maintenance fees or taxes or actions
      falling due within one year after the date of Closing. No Copyright is infringed
      or, to the Company’s knowledge, has been challenged or threatened in any way. To
      the Company’s knowledge, none of the subject matter of any of the Copyrights
      infringes or is alleged to infringe any copyright of any third party or is
      a
      derivative work based on the work of a third party. All works encompassed by
      the
      Copyrights have been marked with the proper copyright notice.

     

    (vii) Trade
      Secrets.
      With
      respect to each Trade Secret, the documentation relating to such Trade Secret
      is
      current, accurate, and sufficient in detail and content to identify and explain
      it and to allow its full and proper use without reliance on the knowledge or
      memory of any individual. The Company has taken all reasonable precautions
      to
      protect the secrecy, confidentiality, and value of its Trade Secrets. The
      Company has good title and an absolute (but not necessarily exclusive) right
      to
      use the Trade Secrets. The Trade Secrets are not part of the public knowledge
      or
      literature, and, to the Company’s knowledge, have not been used, divulged, or
      appropriated either for the benefit of any Person (other the Company) or to
      the
      detriment of the Company. No Trade Secret is subject to any adverse claim or
      has
      been challenged or threatened in any way.

     

    (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged. To the best of Company’s knowledge, such insurance contracts and
      policies are accurate and complete. Neither the Company nor any Subsidiary
      has
      any reason to believe that it will not be able to renew its existing insurance
      coverage as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business without a
      significant increase in cost.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (q) Transactions
      With Affiliates and Employees.
      Except
      as set forth in Schedule
      3.1(q),
      none of
      the officers or directors of the Company and, to the knowledge of the Company,
      none of the employees of the Company are presently a party to any transaction
      with the Company or any Subsidiary (other than for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the knowledge of the Company, any
      entity in which any officer, director, or any such employee has a substantial
      interest or is an officer, director, trustee or partner, in each case in excess
      of $10,000.

     

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

     

    (s) Certain
      Fees.
      Except
      as set forth on Schedule
      3.1(s),
      no
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement. The Holders shall have no obligation with
      respect to any fees or with respect to any claims made by or on behalf of other
      Persons for fees of a type contemplated in this Section that may be due in
      connection with the transactions contemplated by this Agreement. 

     

    (t) Private
      Placement.
      Assuming the accuracy of the Holders’ representations and warranties set forth
      in Section 3.2, no registration under the Securities Act is required for (i)
      the
      offer and sale of the Purchased Securities by the Company to the Purchasers
      as
      contemplated hereby, or (ii) in connection with the Exchange. 

     

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

     

    (v) Registration
      Rights.
      No
      Person has any right to cause the Company to effect the registration under
      the
      Securities Act of any securities of the Company other than the Holders pursuant
      to the Registration Rights Agreement.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (w) Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Holders as a result
      of
      the Holders and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including without limitation as a result
      of the Company’s issuance of the Securities or the Holders’ ownership of the
      Securities.

     

    (x) Disclosure.
      The
      Company understands and confirms that the Holders will rely on the foregoing
      representations and covenants in effecting transactions in securities of the
      Company. All disclosure provided to the Holders regarding the Company, its
      business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, furnished by or on behalf of the Company with
      respect to the representations and warranties made herein are true and correct
      with respect to such representations and warranties and do not contain any
      untrue statement of a material fact or omit to state any material fact necessary
      in order to make the statements made therein, in light of the circumstances
      under which they were made, not misleading. The Company acknowledges and agrees
      that no Holder makes or has made any representations or warranties with respect
      to the transactions contemplated hereby other than those specifically set forth
      in Section 3.2 hereof.

     

    (y) No
      Integrated Offering.
      Assuming
      the accuracy of the Holders’ representations and warranties set forth in Section
      3.2, except for the offering and issuance of $1.5 million of the Bridge
      Debentures to 15 accredited investors in April 2006, neither the Company, nor
      any of its affiliates, nor any Person acting on its or their behalf has,
      directly or indirectly, made any offers or sales of any security or solicited
      any offers to buy any security, under circumstances that would cause this
      offering of the Securities to be integrated with prior offerings by the Company
      for purposes of the Securities Act or any applicable shareholder approval
      provisions.

     

    (z) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the Company’s fair saleable value of its assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business for the current fiscal
      year
      as now conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its debt when such amounts
      are
      required to be paid. The Company does not intend to incur debts beyond its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt). 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (aa) Tax
      Status.
       
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

    (bb) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Purchased Securities for sale only
      to
      the Purchasers and certain other “accredited investors” within the meaning of
      Rule 501 under the Securities Act.

     

    (cc) Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any funds
      for unlawful contributions, gifts, entertainment or other unlawful expenses
      related to foreign or domestic political activity, (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic political parties or campaigns from corporate funds, (iii)
      failed to disclose fully any contribution made by the Company (or made by any
      person acting on its behalf of which the Company is aware) which is in violation
      of law, or (iv) violated in any material respect any provision of the Foreign
      Corrupt Practices Act of 1977, as amended.

     

    (dd) Accountants.
      The
      Company’s accountants are set forth on Schedule
      3.1(dd)
      of the
      Disclosure Schedule. 

     

    (ee) Indebtedness
      and Seniority.
      As of
      the date hereof, all indebtedness and liens of the Company are as set forth
      on
Schedule
      3.1(ee).
      As of
      the Closing Date, no indebtedness or other equity of the Company is senior
      to
      the Debentures in right of payment, whether with respect to interest or upon
      liquidation or dissolution, or otherwise, other than indebtedness secured by
      purchase money security interests (which is senior only as to underlying assets
      covered thereby) and capital lease obligations (which is senior only as to
      the
      property covered thereby).

     

    (ff) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect to
      any
      fees owed to its accountants and lawyers.

     

    (gg) Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated hereby. The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to this Agreement and
      the
      transactions contemplated hereby and any advice given by any Purchaser or any
      of
      their respective representatives or agents in connection with this Agreement
      and
      the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
      that the Company’s decision to enter into this Agreement has been based solely
      on the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (hh) Manufacturing
      and Marketing Rights.
      Except
      as described on Schedule
      3.1(hh),
      the
      Company has not granted rights to manufacture, produce, assemble, license,
      market, or sell its products to any other Person and is not bound by any
      agreement that affects the Company’s exclusive right to develop, manufacture,
      assemble, distribute, market or sell its products.

     

    (ii) Employees.
      The
      Company has no collective bargaining agreements with any of its employees.
      There
      is no labor union organizing activity pending or, to the Company’s knowledge,
      threatened with respect to the Company. Except as set forth on Schedule
      3.1(ii),
      the
      Company is not a party to or bound by any currently effective employment
      contract, deferred compensation arrangement, bonus plan, incentive plan, profit
      sharing plan, retirement agreement or other employee compensation plan or
      agreement. To the Company’s knowledge, no employee of the Company, nor any
      consultant with whom the Company has contracted, is in violation of any term
      of
      any employment contract, proprietary information agreement or any other
      agreement relating to the right of any such individual to be employed by, or
      to
      contract with, the Company because of the nature of the business to be conducted
      by the Company; and to the Company’s knowledge the continued employment by the
      Company of its present employees, and the performance of the Company’s contracts
      with its independent contractors, will not result in any such violation. The
      Company has not received any notice alleging that any such violation has
      occurred. No employee of the Company has been granted the right to continued
      employment by the Company or to any material compensation following termination
      of employment with the Company. The Company is not aware that any officer,
      key
      employee or group of employees intends to terminate his, her or their employment
      with the Company nor does the Company have a present intention to terminate
      the
      employment of any officer, key employee or group of employees.

     

    (jj) Obligations
      of Management.
      The
      Company’s Chief Executive Officer, Howard Leventhal, is currently devoting
      substantially all of his business time to the conduct of business of the
      Company. The Company is not aware that Howard Leventhal is planning to work
      less
      than full time at the Company in the future. No officer or key employee is
      currently working or, to the Company’s knowledge, plans to work for a
      competitive enterprise, whether or not such officer of key employee is or will
      be compensated by such enterprise. The Company intends to purchase ‘Key Man”
life insurance covering the life of Howard Leventhal with the Company as
      beneficiary.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (kk) Environmental
      and Safety Laws.
      Except
      as set forth in Schedule
      3.1(kk):

     

    (i) The
      Company is, and at all times has been, in full compliance with, and has not
      been
      and is not in violation of or liable under, any Environmental Law. The Company
      has no basis to expect, nor has it or any other Person for whose conduct it
      is
      or may be held to be responsible received, any actual or threatened order,
      notice, or other communication from (i) any governmental body or private citizen
      acting in the public interest, or (ii) the current or prior owner or operator
      of
      any facilities, of any actual or potential violation or failure to comply with
      any Environmental Law, or of any actual or threatened obligation to undertake
      or
      bear the cost of any environmental, health, and safety liabilities with respect
      to any of the facilities or any other properties or assets (whether real,
      personal, or mixed) in which the Company has had an interest, or with respect
      to
      any property or facility at or to which Hazardous Materials were generated,
      manufactured, refined, transferred, imported, used, or processed by the Company,
      or any other Person for whose conduct it are or may be held responsible, or
      from
      which Hazardous Materials have been transported, treated, stored, handled,
      transferred, disposed, recycled, or received. 

     

    (ii) There
      are
      no pending or, to the knowledge of the Company, threatened claims, encumbrances,
      or other restrictions of any nature, resulting from any environmental, health,
      and safety liabilities or arising under or pursuant to any Environmental Law,
      with respect to or affecting any of the facilities or any other properties
      and
      assets (whether real, personal, or mixed) in which the Company has or had an
      interest. 

     

    (iii) The
      Company has no knowledge of any basis to expect, nor has it or any other Person
      for whose conduct it is or may be held responsible, received, any citation,
      directive, inquiry, notice, order, summons, warning, or other communication
      that
      relates to Hazardous Materials, or any alleged, actual, or potential violation
      or failure to comply with any Environmental Law, or of any alleged, actual,
      or
      potential obligation to undertake or bear the cost of any environmental, health,
      and safety liabilities with respect to any of the facilities or any other
      properties or assets (whether real, personal, or mixed) in which the Company
      had
      an interest, or with respect to any property or facility to which Hazardous
      Materials generated, manufactured, refined, transferred, imported, used, or
      processed by the Company, or any other Person for whose conduct it is or may
      be
      held responsible, have been transported, treated, stored, handled, transferred,
      disposed, recycled, or received.

     

    (iv) Neither
      the Company nor any other Person for whose conduct it is or may be held
      responsible, had any environmental, health, and safety liabilities with respect
      to the facilities or, to the knowledge of the Company, with respect to any
      other
      properties and assets (whether real, personal, or mixed) in which the Company
      (or any predecessor), has or had an interest, or at any property geologically
      or
      hydrologically adjoining the facilities or any such other property or
      assets.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (v) There
      are
      no Hazardous Materials present on or in the environment at the facilities or
      at
      any geologically or hydrologically adjoining property, including any Hazardous
      Materials contained in barrels, above or underground storage tanks, landfills,
      land deposits, dumps, equipment (whether moveable or fixed) or other containers,
      either temporary or permanent, and deposited or located in land, water, sumps,
      or any other part of the facilities or such adjoining property, or incorporated
      into any structure therein or thereon. Neither the Company nor any other Person
      for whose conduct it is or may be held responsible, or to the knowledge of
      the
      Company, any other Person, has permitted or conducted, or is aware of, any
      hazardous activity conducted with respect to the facilities or any other
      properties or assets (whether real, personal, or mixed) in which the Company
      has
      or had an interest except in full compliance with all applicable Environmental
      Laws. 

     

    (vi) There
      has
      been no release or, to the knowledge of the Company, threat of release, of
      any
      Hazardous Materials at or from the facilities or at any other locations where
      any Hazardous Materials were generated, manufactured, refined, transferred,
      produced, imported, used, or processed from or by the facilities, or from or
      by
      any other properties and assets (whether real, personal, or mixed) in which
      the
      Company has or had an interest, or to the knowledge of the Company any
      geologically or hydrologically adjoining property, whether by the Company,
      or
      any other Person.

     

    (vii) The
      Company has delivered to the Holders true and complete copies and results of
      any
      reports, studies, analyses, tests, or monitoring possessed or initiated by
      the
      Company pertaining to Hazardous Materials in, on, or under the facilities,
      or
      concerning compliance by the Company, or any other Person for whose conduct
      they
      are or may be held responsible, with Environmental Laws.

     

    (viii) For
      the
      purpose of this Section, Hazardous Material shall mean (i) materials which
      are
      listed or otherwise defined as “hazardous” or “toxic” under any applicable
      federal, local or stated and/or foreign laws and regulations that govern the
      existence and/or remedy of contamination on property, the protection of the
      environment from contamination, the control of the hazardous wastes, or other
      activities involving hazardous substances, including building materials or
      (b)
      petroleum products or nuclear materials.

     

    (ix) For
      the
      purpose of this Section 3.1(kk), “Environmental Law” shall have the following
      meaning:

     

    
      	 	
              (1)

            	
              advising
                appropriate authorities, employees, and the public intended or actual
                releases of pollutants or hazardous substances or material, violations
                of
                discharge limits, or other prohibitions and of the commencements
                of
                activities, such as resource extraction or construction, that could
                have
                significant impact on the
                environment;

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (2)

            	
              preventing
                or reducing to acceptable levels the release of pollutants or hazardous
                substances or materials into the
                environment;

            

    

     

    
      	 	
              (3)

            	
              reducing
                the quantities, preventing the release, or minimizing the hazardous
                characterics of waste that are
                generated;

            

    

     

    
      	 	
              (4)

            	
              assuring
                that products are designed, formulated, packaged, and used so that
                they do
                not present unreasonable risks to human health or the environment
                when
                used or disposed of;

            

    

     

    
      	 	
              (5)

            	
              protecting
                resources, species or ecological
                amenities;

            

    

     

    
      	 	
              (6)

            	
              reducing
                to acceptable levels the risk inherent in the transportation of hazardous
                substances, pollutants, oil or other potentially harmful
                substances;

            

    

     

    
      	 	
              (7)

            	
              cleaning
                up pollutants that have been released, preventing the threat of release
                or
                paying the costs of such clean up or prevention;
                or

            

    

     

    
      	 	
              (8)

            	
              making
                responsible parties pay private parties, or groups of them, for damages
                done to their health or to the environment, or permitting self appointed
                representatives of the public interest to recover for injuries done
                to
                public assets.

            

    

     

    (ll) Accounts
      Receivable.
      All
      accounts receivable of the Company and its Subsidiaries that are reflected
      on
      the Company’s balance sheet or interim balance sheet or on the accounting
      records of the Company and its Subsidiaries as of the Closing Date
      (collectively, the “Accounts
      Receivable”)
      represent or will represent valid obligations arising from sales actually made
      or services actually performed in the ordinary course of business. Unless paid
      prior to the Closing Date, the Accounts Receivable are or will be as of the
      Closing Date current and collectible net of the respective reserves shown on
      the
      balance sheet or interim balance sheet or on the accounting records of the
      Company and its Subsidiaries as of the Closing Date (which reserves are adequate
      and calculated consistent with past practice and, in the case of the reserve
      as
      of the Closing Date, will not represent a greater percentage of the Accounts
      Receivable as of the Closing Date than the reserve reflected in the interim
      balance sheet represented of the Accounts Receivable reflected therein and
      will
      not represent a material adverse change in the composition of such Accounts
      Receivable in terms of aging). Subject to such reserves, each of the Accounts
      Receivable either has been or will be collected in full without any set-off,
      within ninety days after the day on which it becomes due and payable. There
      is
      no contest, claim, or right of set-off, other than returns in the ordinary
      course of business, under any agreement and/or contract with any obligor of
      an
      Accounts Receivable relating to the amount or validity of such Accounts
      Receivable. Schedule
      3.1(nn)
      contains
      a complete and accurate list of all Accounts Receivable as of the date of the
      interim balance sheet, which list sets forth the aging of such Accounts
      Receivable.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (mm) Inventory.
      All
      inventory of the Company and the Subsidiaries, whether or not reflected in
      the
      balance sheet or interim balance sheet, consists of a quality and quantity
      usable and salable in the ordinary course of business, except for obsolete
      items
      and items of below standard quality, all of which have been written off or
      written down to net realizable value in the balance sheet or interim balance
      sheet or on the accounting records of the Company and the Subsidiaries as of
      the
      Closing Date, as the case may be. All inventories not written off have been
      priced at the lower of cost or market on the last in, first out basis. The
      quantities of each item of inventory (whether raw materials, work-in-process,
      or
      finished goods) are not excessive, but are reasonable in the present
      circumstances of the Company and the Subsidiaries.

     

    (nn) Employee
      Benefits: 
      Except as set forth on Schedule
      3.1(pp),
      the
      Company has no plans that are subject to ERISA.   ”ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, or any
      successor law, and regulations and rules issued pursuant to that Act or any
      successor law.

     

    (oo) Material
      Agreements.
      Schedule
      3.1(qq)
      sets
      forth all agreements of the Company that would be required to be filed with
      the
      Commission as exhibits pursuant to the Exchange Act and that have not been
      filed
      as of the date hereof.

     

    (pp) Subsidiary
      Representations.
      All of
      the representations, warranties and disclosure described in Article III of
      this
      Agreement are hereby made by the Company with respect to each of the
      Subsidiaries. All such disclosure is made on the Schedules hereto with respect
      to the Subsidiaries.

     

    (ss) SEC
      Filings.
      The
      Company’s registration statement on Form 10 for the Common Stock has become
      effective and continues to be effective. The Company has made all filings (“SEC
      Filings”) with the SEC that it is required to make under the Securities Act and
      the Exchange Act. Each of the Company’s SEC Filings complied in all material
      respects with the Securities Act and the Exchange Act, as applicable, in effect
      as of their respective dates of filing. None of the Company’s SEC Filings
      contained, as of their respective dates of filing, or contain any untrue
      statement of a material fact or omitted or omit to state a material fact
      required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. 

    

    (tt) Minute
      Books.
      The
      minute books of the Company made available to the Holders contain a complete
      summary of all meetings of directors and stockholders since the time of
      incorporation. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    3.2 Representations
      and Warranties of the Holders.
      Each
      Holder hereby, for itself and for no other Holder, represents and warrants
      as of
      the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a) Organization;
      Authority.
      If such
      Holder is an entity, the entity is duly organized, validly existing and in
      good
      standing under the laws of the jurisdiction of its organization with full right,
      corporate or similar power and authority to enter into and to consummate the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations thereunder. The execution, delivery and performance by
      such
      Holder of the transactions contemplated by this Agreement have been duly
      authorized by all necessary corporate or similar action on the part of such
      Holder. Each Transaction Document to which it is a party has been duly executed
      by such Holder, and when delivered by such Holder in accordance with the terms
      hereof, will constitute the valid and legally binding obligation of such Holder,
      enforceable against it in accordance with its terms, except (i) as limited
      by
      general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    (b) Own
      Account.
      Such
      Holder understands that the Securities are “restricted securities” and have not
      been registered under the Securities Act or any applicable state securities
      law
      and is acquiring the Securities as principal for its own account and not with
      a
      view to or for distributing or reselling such Securities or any part thereof
      in
      violation of the Securities Act or any applicable state securities law, has
      no
      present intention of distributing any of such Securities in violation of the
      Securities Act or any applicable state securities law and has no arrangement
      or
      understanding with any other persons regarding the distribution of such
      Securities (this representation and warranty not limiting such Holder’s right to
      sell the Securities pursuant to the Registration Statement as defined in the
      Registration Rights Agreement or otherwise in compliance with applicable federal
      and state securities laws) in violation of the Securities Act or any applicable
      state securities law. Such Holder is acquiring the Securities hereunder in
      the
      ordinary course of its business. Such Holder does not have any agreement or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

     

    (c) Holder
      Status.
      At the
      time such Holder was offered the Securities, it was, and at the date hereof
      it
      is, and on the Closing Date and on each date on which it Exchanges any Bridge
      Debentures it will be, either: (i) an “accredited investor” as defined in Rule
      501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii)
      a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
      Act. Such Holder is not required to be registered as a broker-dealer under
      Section 15 of the Exchange Act.

     

    (d) Experience
      of Such Holder.
      Such
      Holder, either alone or together with its representatives, has such knowledge,
      sophistication and experience in business and financial matters so as to be
      capable of evaluating the merits and risks of the prospective investment in
      the
      Securities, and has so evaluated the merits and risks of such investment. Such
      Holder is able to bear the economic risk of an investment in the Securities
      and,
      at the present time, is able to afford a complete loss of such
      investment.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (e) General
      Solicitation.
      Such
      Holder is not acquiring the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    The
      Holders acknowledge that the Company will be relying on the foregoing
      representations and warranties in making a determination as to the availability
      of federal and state securities laws exemptions. The Company acknowledges and
      agrees that each Holder does not make or has not made any representations or
      warranties with respect to the transactions contemplated hereby other than
      those
      specifically set forth in this Section 3.2.

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

     

    (a) The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an affiliate of a Holder or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Holder
      under this Agreement.

     

    (b) The
      Holders agree to the imprinting, so long as is required by this Section 4.1(b),
      of a legend on any of the Securities in the following form:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT, AND THE SECURITIES INTO
      WHICH THESE SECURITIES ARE CONVERTIBLE OR EXERCISABLE WILL NOT BE, REGISTERED
      WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
      ANY
      STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
      OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
      NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
      ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
      OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
      REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES
      ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES MAY NOT BE PLEDGED
      IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    The
      Company acknowledges and agrees that a Holder may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and, if required under the terms of such arrangement, such Holder may transfer
      pledged or secured Securities to the pledgees or secured parties. Such a pledge
      or transfer would not be subject to approval of the Company and no legal opinion
      of legal counsel of the pledgee, secured party or pledgor shall be required
      in
      connection therewith. Further, no notice shall be required of such pledge.
      At
      the appropriate Holder’s expense, the Company will execute and deliver such
      reasonable documentation as a pledgee or secured party of Securities may
      reasonably request in connection with a pledge or transfer of the
      Securities.

     

    4.2 Key
      Man Life Insurance.
      Within
      90 days from the Closing the Company will purchase a policy of key man life
      insurance covering the life of Howard Leventhal in the face amount of at least
      $5.0 Million, with the Company as beneficiary, and will maintain such insurance
      in force until the later of: (1) payment of all accrued interest and principal,
      or conversion in accordance with their terms, of all of the Debentures; or
      (2)
      exercise or conversion of all the Warrants.

     

    4.3 Maintenance
      of SEC Filings.
      The
      Company will file all reports and documents with the SEC that it is required
      to
      file under the Securities Act and the Exchange Act. Each of the Company’s SEC
      Filings shall comply in all material respects with the Securities Act and the
      Exchange Act in effect as of their respective dates of filing. None of the
      Company’s SEC Filings, as of their respective filing dates, shall contain any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein or necessary in order to make the statements made therein,
      in
      light of the circumstances under which they were made, not
      misleading.

     

    4.4 Integration.
      The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchasers or the Exchange to the Holders or that
      would
      be integrated with the offer or sale of the Securities for purposes of the
      rules
      and regulations of any Trading Market.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    4.5 Exchange
      of Existing Bridge Debentures.
      (a) At
      or immediately before the Closing, the Company shall complete an Exchange with
      each holder of the outstanding Bridge Debentures. In the Exchange, each Bridge
      Debenture holder shall receive, for each $100,000 in principal amount of Bridge
      Debentures exchanged:

     

    (i)
       An
      Exchange Debenture in the principal amount equal to the original principal
      amount of the Bridge Debenture held, plus accrued unpaid interest thereon from
      April 14, 2006 until the Closing;

     

    (ii)
       A
      Series
      A Warrant to purchase 200,000 shares of Company Common Stock;

     

    (iii)
       A
      Series
      B Warrant to purchase 100,000 shares of Company Common Stock; 

     

    (iv)
       An
      Exchange Bonus Warrant to purchase 50,000 shares of Company Common Stock at
      the
      Conversion Price.

     

    (b) In
      connection with the Exchange, the Company shall deliver or cause to be delivered
      to each exchanging Bridge Debenture holder the following:

     

    
      	 	
              (i)

            	
              this
                Agreement duly executed by the
                Company;

            

    

     

    
      	 	
              (ii)

            	
              a
                legal opinion of Company Counsel, in the form of Exhibit
                C
                attached hereto; 

            

    

     

    
      	 	
              (iii)

            	
              a
                Exchange Debenture with a principal amount equal to the principal
                amount
                of Bridge Debentures exchanged by such Bridge Debenture holder plus
                accrued unpaid interest thereon from April 14, 2006 until the Closing,
                registered in the name of the Holder, duly executed by the
                Company;

            

    

     

    
      	 	
              (iv)

            	
              a
                Series A Warrant, a Series B Warrant and an Exchange Bonus Warrant
                registered in the name of the Holder, duly executed by the
                Company;

            

    

     

    
      	
            	(v)	
              a
                copy of the Security Agreement duly executed by the
                Company;

            

    

    

    
      	
            	(vi)	
              a
                copy of the Escrow Agreement duly executed by the
                Company;

            

    

    

    
      	 	
              (vii)

            	
              a
                copy of the Collateral Agent Agreement duly executed by the Company;
                

            

    

    

    
      	 	
              (viii)

            	
              a
                copy of duly executed lock-up agreements, in the form of Exhibit E
                attached hereto, from each officer, director, employee, consultant
                and
                advisor of the Company and from each shareholder of the Company owning
                more than 5% of the issued and outstanding shares of Common Stock
                (or
                Common Stock Equivalents on a fully converted basis), who are identified
                on Schedule 2.2(a); and 

            

    

    

    
      	 	
              (ix)

            	
              a
                copy of the Registration Rights Agreement duly executed by the
                Company.

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (c)
       In
      connection with the Exchange, each exchanging Bridge Debenture holder shall
      deliver or cause to be delivered to the Escrow Agent, the following:

     

    
      	 	
              (i)

            	
              this
                Agreement duly executed by such
                Holder;

            

    

     

    
      	 	
              (ii)

            	
              such
                Holder’s Bridge Debenture;

            

    

     

    
      	 	
              (iii)

            	
              a
                copy of the Security Agreement, duly executed by such
                Holder;

            

    

    

    
      	
            	(iv)	
              the
                Escrow Agreement duly executed by such Holder;

            

    

    

    
      	 	
              (v)

            	
              the
                Collateral Agent Agreement duly executed by such Holder;
                and

            

    

    

    
      	 	
              (vi)

            	
              the
                Registration Rights Agreement duly executed by such
                Holder.

            

    

    

    4.6 Securities
      Laws Disclosure; Publicity.
      The
      Company and each Holder shall consult with each other in issuing any other
      press
      releases with respect to the transactions contemplated hereby, and neither
      the
      Company nor any Holder shall issue any such press release or otherwise make
      any
      such public statement without the prior consent of the Company, with respect
      to
      any press release of any Holder, or without the prior consent of each Holder,
      with respect to any press release of the Company, which consent shall not
      unreasonably be withheld, except if such disclosure is required by law, in
      which
      case the disclosing party shall promptly provide the other party with prior
      notice of such public statement or communication. Notwithstanding the foregoing,
      the Company shall not publicly disclose the name of any Holder, or include
      the
      name of any Holder in any filing with the Commission or any regulatory agency
      or
      Trading Market, without the prior written consent of such Holder, except (i)
      as
      required by federal securities law in connection with the registration statement
      contemplated by the Registration Rights Agreement and (ii) to the extent such
      disclosure is required by law or Trading Market regulations, in which case
      the
      Company shall provide the Holders prior notice of such disclosure permitted
      under subclause (i) or (ii).

     

    4.7 Shareholder
      Rights Plan.
      No
      claim will be made or enforced by the Company or, to the knowledge of the
      Company, any other Person that any Holder is an “Acquiring Person” under any
      shareholder rights plan or similar plan or arrangement in effect or hereafter
      adopted by the Company, or that any Holder could be deemed to trigger the
      provisions of any such plan or arrangement, by virtue of receiving Securities
      under the Transaction Documents or under any other agreement between the Company
      and the Holders. The Company shall conduct its business in a manner so that
      it
      will not become subject to the Investment Company Act.

     

    4.8 Non-Public
      Information.
      As long
      as the Company remains subject to the reporting provisions of the Exchange
      Act,
      the Company covenants and agrees that neither it nor any other Person acting
      on
      its behalf will provide any Holder or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Holder shall have executed a written agreement regarding
      the
      confidentiality and use of such information. The Company understands and
      confirms that each Holder shall be relying on the foregoing representations
      in
      effecting transactions in securities of the Company.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    4.9 Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      for
      the purposes set forth on Schedule
      4.9
      and not
      to redeem any Common Stock or Common Stock Equivalents or to settle any
      outstanding litigation.

     

    4.10 Reimbursement.
      If any
      Holder becomes involved in any capacity in any Proceeding by or against any
      Person who is a stockholder of the Company (except as a result of sales,
      pledges, margin sales and similar transactions by such Holder to or with any
      current stockholder), solely as a result of such Holder’s acquisition of the
      Securities under this Agreement, the Company will reimburse such Holder for
      its
      reasonable legal and other expenses (including the cost of any investigation
      preparation and travel in connection therewith) incurred in connection
      therewith, as such expenses are incurred. The reimbursement obligations of
      the
      Company under this paragraph shall be in addition to any liability which the
      Company may otherwise have, shall extend upon the same terms and conditions
      to
      any Affiliates of the Holders who are actually named in such action, proceeding
      or investigation, and partners, directors, agents, employees and controlling
      persons (if any), as the case may be, of the Holders and any such Affiliate,
      and
      shall be binding upon and inure to the benefit of any successors, assigns,
      heirs
      and personal representatives of the Company, the Holders and any such Affiliate
      and any such Person. The Company also agrees that neither the Holders nor any
      such Affiliates, partners, directors, agents, employees or controlling persons
      shall have any liability to the Company or any Person asserting claims on behalf
      of or in right of the Company solely as a result of acquiring the Securities
      under this Agreement.

     

    4.11 Indemnification
      of Holders.
      Subject
      to the provisions of this Section 4.11, the Company will indemnify and hold
      the
      Holders and their directors, officers, shareholders, partners, employees and
      agents (each, a “Holder
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such Holder Party may suffer or incur as a result of
      or
      relating to (a) any breach of any of the representations, warranties, covenants
      or agreements made by the Company in this Agreement or in the other Transaction
      Documents or (b) any action instituted against a Holder, or any of them or
      their
      respective Affiliates, by any stockholder of the Company who is not an Affiliate
      of such Holder, with respect to any of the transactions contemplated by the
      Transaction Documents (unless such action is based upon a breach of such
      Holder’s representations, warranties or covenants under the Transaction
      Documents or any agreements or understandings such Holder may have with any
      such
      stockholder or any violations by the Holder of state or federal securities
      laws
      or any conduct by such Holder which constitutes fraud, gross negligence, willful
      misconduct or malfeasance). If any action shall be brought against any Holder
      Party in respect of which indemnity may be sought pursuant to this Agreement,
      such Holder Party shall promptly notify the Company in writing, and the Company
      shall have the right to assume the defense thereof with counsel of its own
      choosing. Any Holder Party shall have the right to employ separate counsel
      in
      any such action and participate in the defense thereof, but the fees and
      expenses of such counsel shall be at the expense of such Holder Party except
      to
      the extent that (i) the employment thereof has been specifically authorized
      by
      the Company in writing, (ii) the Company has failed after a reasonable period
      of
      time to assume such defense and to employ counsel or (iii) in such action there
      is, in the reasonable opinion of such separate counsel, a material conflict
      on
      any material issue between the position of the Company and the position of
      such
      Holder Party. The Company will not be liable to any Holder Party under this
      Agreement (i) for any settlement by a Holder Party effected without the
      Company’s prior written consent, which shall not be unreasonably withheld or
      delayed; or (ii) to the extent, but only to the extent that a loss, claim,
      damage or liability is attributable to any Holder Party’s breach of any of the
      representations, warranties, covenants or agreements made by the Holders in
      this
      Agreement or in the other Transaction Documents.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    4.12 Reservation
      and Listing of Common Stock.

     

    (a) The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Transaction Documents in such amount as may be
      required to fulfill its obligations in full under the Transaction
      Documents.

     

    (b) The
      Company shall sell additional Common Stock to at least that number of
      purchasers, in a manner which complies with Section 4.4 above, such that the
      Company shall have no fewer than 50 holders of Common Stock of the Company
      not
      later than the earlier of: (i) the date on which the Company takes the steps
      required by Section 4.12 (c) below, or (ii) the date by which the Company is
      required to file the first registration statement required under the
      Registration Rights Agreement.

     

    (c) The
      Company shall, (i) in the time and manner required by a Trading Market, prepare
      and file with such Trading Market a listing application covering its Common
      Stock and take all steps necessary to cause the Common Stock to be approved
      for
      listing and actually listed on the Trading Market not later than the effective
      date of the Registration Statement (as defined in the Registration Rights
      Agreement) (the
      “Listing
      Date),
      (ii)
      provide to the Holders evidence of such listing, and (iii) maintain the listing
      of such Common Stock for at least as long as the Debentures and the Warrants
      remain outstanding. A failure of the Company to timely meet the requirements
      of
      this Section 4.12(c) is referred to as a “Listing Default”.

     

    4.13 Participation
      in Future Financing.
      

     

    (a)   From
      the
      date hereof until the date that is the 24 month anniversary of the date hereof,
      upon any financing by the Company or any of its Subsidiaries, involving the
      issuance of Common Stock or Common Stock Equivalents (a “Subsequent
      Financing”),
      each
      Holder shall have the right to participate in up to an amount of the Subsequent
      Financing equal to the Holder’s Pro Rata Portion (as defined below) of 100% of
      the Subsequent Financing (the “Participation
      Maximum”).
      

     

    (b)   At
      least
      ten (10) Business Days prior to the closing of the Subsequent Financing, the
      Company shall deliver to each Holder a written notice of its intention to effect
      a Subsequent Financing (“Pre-Notice”),
      which
      Pre-Notice shall ask such Holder if it wants to review the details of such
      financing (such additional notice, a “Subsequent
      Financing Notice”).
      Upon
      the request of a Holder, and only upon a request by such Holder, for a
      Subsequent Financing Notice, the Company shall promptly, but no later than
      1
      Business Day after such request, deliver a Subsequent Financing Notice to such
      Holder. The Subsequent Financing Notice shall describe in reasonable detail
      the
      proposed terms of such Subsequent Financing, the amount of proceeds intended
      to
      be raised thereunder, the Person with whom such Subsequent Financing is proposed
      to be effected, and attached to which shall be a term sheet or similar document
      relating thereto. 

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (c)   Any
      Holder desiring to participate in such Subsequent Financing must provide written
      notice to the Company by not later than 5:30 p.m. (New York City time) on the
      5th
      Business
      Day after all of the Holders have received the Pre-Notice that the Holder is
      willing to participate in the Subsequent Financing, the amount of the Holder’s
      participation, and that the Holder has such funds ready, willing, and available
      for investment on the terms set forth in the Subsequent Financing Notice. If
      the
      Company receives no notice from a Holder as of such 5th
      Business
      Day, such Holder shall be deemed to have notified the Company that it does
      not
      elect to participate. 

     

    (d) If
      by
      5:30 p.m. (New York City time) on the 5th
      Business
      Day after all of the Holders have received the Pre-Notice, notifications by
      the
      Holders of their willingness to participate in the Subsequent Financing (or
      to
      cause their designees to participate) is, in the aggregate, less than the total
      amount of the Subsequent Financing, then the Company may effect the remaining
      portion of such Subsequent Financing on the terms and to the Persons set forth
      in the Subsequent Financing Notice. 

     

    (e) If
      by
      5:30 p.m. (New York City time) on the 5th
      Business
      Day after all of the Holders have received the Pre-Notice, the Company receives
      responses to a Subsequent Financing Notice from Holders seeking to purchase
      more
      than the aggregate amount of the Participation Maximum, each such Holder shall
      have the right to purchase the greater of (a) their Pro Rata Portion (as defined
      below) of the Participation Maximum and (b) the difference between the
      Participation Maximum and the aggregate amount of participation by all other
      Holders.  “Pro
      Rata Portion”
is
      the
      ratio of (x) the Subscription Amount of Securities purchased on the Closing
      Date
      by a Holder participating under this Section 4.13 and (y) the sum of the
      aggregate Subscription Amounts of Securities purchased on the Closing Date
      by
      all Holders participating under this Section 4.13.

     

    (f)   The
      Company must provide the Holders with a second Subsequent Financing Notice,
      and
      the Holders will again have the right of participation set forth above in this
      Section 4.13, if the Subsequent Financing subject to the initial Subsequent
      Financing Notice is not consummated for any reason on substantially the same
      terms as set forth in such Subsequent Financing Notice within 60 Business Days
      after the date of the initial Subsequent Financing Notice. 

     

    (g)   Notwithstanding
      the foregoing, this Section 4.13 shall not apply in respect of an Exempt
      Issuance.

     

    (h)   Each
      Holder that is entitled to participate in future financings pursuant to Section
      4.13 of the Securities Purchase Agreement dated April 14, 2006 (the “Prior
      Agreement”) relating to the Bridge Debentures agrees that the provisions of this
      Section 4.13 shall supercede its rights under the Prior Agreement.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    4.14 Subsequent
      Equity Sales.
      From
      the date hereof until the earlier of such time as no Holder holds any of the
      Debentures and all outstanding Debentures have been retired, the Company shall
      be prohibited from effecting or entering into an agreement to effect any
      subsequent equity sale involving a “Variable Rate Transaction”. The term
“Variable
      Rate Transaction”
shall
      mean a transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock or
      (ii) enters into any agreement, including, but not limited to, an equity line
      of
      credit, whereby the Company may sell securities at a future determined
      price.

     

    4.15 Equal
      Treatment of Holders.
      No
      consideration shall be offered or paid to any person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. Further, the Company shall not make any payment of
      principal or interest on the Debentures in amounts that are disproportionate
      to
      the respective principal amounts outstanding on the Debentures at any applicable
      time. For clarification purposes, this provision constitutes a separate right
      granted to each Holder by the Company and negotiated separately by each Holder,
      and is intended to treat for the Company the Debenture holders as a class and
      shall not in any way be construed as the Holders acting in concert or as a
      group
      with respect to the purchase, disposition or voting of Securities or
      otherwise.

     

    4.16 Priority
      of Investment.
      The
      Company shall subordinate all outstanding loans and loans from shareholders
      and
      other beneficial owners of Common Stock and Common Stock Equivalents to the
      Debentures.

     

    4.17 Reporting
      Requirements.
      

     

    (a) For
      so
      long as the Company is subject to the reporting requirements of the Exchange
      Act, the Company shall furnish to the Broker and to each Holder promptly after
      the filing thereof, copies of all reports, if any, which the Company sends
      to
      any of its shareholders and copies of all reports and registration statements,
      if any, which the Company files with the Commission or any Trading
      Market.

     

    (b) If
      at any
      time the Company is no longer subject to the reporting requirements of the
      Exchange Act or is in default of its obligation to file any quarterly or annual
      report with the Commission, the Company shall furnish to the Broker and to
      each
      Holder that holds at least $100,000 principal amount of Debentures (or any
      combination of Debentures and shares of Common Stock with a market value of
      at
      least $100,000) the following: 

     

    (i) 
      As soon
      as available and in any event within ninety (90) days after the end of each
      fiscal year of the Company, audited financial statements of the Company as
      at
      the end of such fiscal year and related statements of income and expenses for
      such fiscal year, all in reasonable detail and in scope to the Holder, prepared
      in accordance with GAAP, with the opinion of an independent certified public
      accountant reasonably acceptable to the Holder as evidenced by the prior written
      consent of the Holder;

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (ii) 
      As soon
      as available and in any event within forty-five (45) days after the end of
      the
      sixth (6th)
      month
      of the Company’s fiscal year, reviewed financial statements of the Company as at
      the end of such six month period and related statements of income and expenses
      for such period, all in reasonable detail and scope to Holder, prepared in
      accordance with GAAP, and prepared by an independent certified public accountant
      reasonably acceptable to the Holder as evidenced by the prior written consent
      of
      the Holder; 

     

    (iii) 
      As soon
      as available and in any event within thirty (30) days after the end of each
      fiscal quarter, quarterly financial statements prepared by the Company and
      other
      information reasonably requested by the Holder;

     

    (iv) 
      As soon
      as available and in any event within fifteen (15) days after the end of each
      month, monthly reports containing information on the Company’s sales and other
      information reasonably requested by the Holder;

     

    (v) 
      As soon
      as available and in any event not less than thirty (30) days prior to the
      commencement of each fiscal year, a detailed annual budget and strategic plan
      for the Company’s business for such fiscal year, which shall have been approved
      by the Company’s Board of Directors;

     

    (vi) 
      As soon
      as possible and in any event within five (5) days after the Holders notify
      the
      Company of the occurrence of each Event of Default, a statement of an authorized
      officer of the Company setting forth the nature and period of existence of
      such
      Event of Default and the action which the Company has taken and proposes to
      take
      with respect thereto;

     

    (vii) 
      Promptly
      after the sending or filing thereof, copies of all reports, if any, which the
      Company sends to any of its shareholders, and copies of all reports and
      registration statements, if any, which the Company files with the Commission
      or
      any Trading Market;

     

    (viii) 
      Promptly
      after the filing or receiving thereof, copies of all reports and notices, if
      any, which the Company files under ERISA, with the Internal Revenue Service
      or
      the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or
      which the Company receives from any of such Persons;

     

    (ix) 
      Promptly
      upon determination of the need for the Company to obtain additional financing,
      all information concerning such determination if, as and when available;

     

    (x) 
      Information concerning offers or solicitations, and the terms and conditions
      thereof, for additional equity financing, given to the Holder not less than
      30
      days prior to the entering into of such financial arrangement; and

     

    (xi) 
      Such
      other information respecting the condition or operations, financial or
      otherwise, of the Company as the Holders may from time to time reasonably
      request.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    4.18 Accountants.
      The
      Company shall promptly give the Holder notice of any change in the firm of
      independent certified public accountants utilized by the Company, provided
      that
      any new firm shall be reasonably acceptable to the Holders.

     

    4.19 Access
      to Records.
      If at
      any time the Company is no longer subject to the reporting requirements of
      the
      Exchange Act or is in default of its obligation to file any quarterly or annual
      report with the Commission, the Company shall provide the Broker and to each
      Holder that holds at least $100,000 principal amount of Debentures (or any
      combination of Debentures and shares of Common Stock with a market value of
      at
      least $100,000) and/or any of its duly authorized representatives, attorneys
      or
      accountants access to any and all records at the premises of the Company where
      such records are kept, such access being afforded without charge, but only
      upon
      reasonable request and during normal business hours.

     

    4.20 Board
      of Directors.
      If at
      any time the Company is no longer subject to the reporting requirements of
      the
      Exchange Act or is in default of its obligation to file any quarterly or annual
      report with the Commission, the Company shall have elected and in place a duly
      elected Board of Directors consisting of at least three directors from and
      after
      the Closing Date, provide each Holder that holds at least $250,000 principal
      amount of Debentures with “observer” status and the right to attend all meetings
      of the Board of Directors of the Company and to obtain copies of all minutes
      of
      meetings of the Board of Directors or any Committee thereof and notices
      regarding such meetings, as well as copies of all correspondence to members
      of
      the Board of Directors, subject to reasonable limitations in order to maintain
      the attorney-client privilege and confidentiality, including with respect to
      transactions involving such Holder.. 

     

    4.21 Maintenance
      of Property.
      The
      Company shall keep all of its property, which is necessary or useful to the
      conduct of its business, in good working order and condition, ordinary wear
      and
      tear excepted.

     

    4.22 Litigation.
      The
      Company shall promptly give the Holders notice in writing of all litigation
      and
      of all proceedings before any court, tribunal or Government Entity (as defined
      below) affecting the Company or any Subsidiary, except litigation proceedings
      which, if adversely determined, would not have a Material Adverse Effect. A
      “Government
      Entity”
means
      the United States of America, any foreign country, any state or province, any
      political subdivision of a state and any agency or instrumentality of the United
      States of America or any foreign country or any state or political subdivision
      thereof and any entity exercising executive, legislative, judicial, regulatory
      or administrative functions of or pertaining to government.

     

    4.23 Preservation
      of Corporate Existence.
      The
      Company shall preserve and maintain its corporate existence, rights, privileges
      and franchises in the jurisdiction of its incorporation, and qualify and remain
      qualified, as a foreign corporation in each jurisdiction in which such
      qualification is necessary in view of its business or operations and where
      the
      failure to qualify or remain qualified might reasonably have a Material Adverse
      Effect upon the financial condition, business or operations of the Company
      and
      its Subsidiaries taken as a whole.

     

    4.24 Brokers.
      The
      Company agrees to indemnify the Holders against and hold the Holders harmless
      from any and all liabilities to any persons claiming brokerage commissions
      or
      similar fees other than the Broker on account of services purported to have
      been
      rendered on behalf of the Company in connection with this Agreement or the
      transactions contemplated hereby and arising out of the Company’s actions. The
      Company agrees that it will pay the Broker the fees set forth on Schedule
      4.24
      hereto.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    4.25
       Conversion.
      The
      holders of the Debentures shall have conversion rights as follows (the
“Conversion Rights”):

     

    (a)
       Right
      to Convert.
      Each
      Debenture shall be convertible, at the option of the Holder thereof, at any
      time
      after Closing into that number of fully-paid, nonassessable shares of Common
      Stock determined by dividing (i) the amount of the Debenture to be converted
      plus the amount of any accumulated but unpaid interest, plus any accumulated
      unpaid penalties or other adjustments as of the Conversion Date by (ii) the
      applicable Conversion Price. Upon any decrease or increase in the applicable
      Conversion Price, as described in this Section 4.25, the applicable Conversion
      Rate shall be appropriately increased or decreased.

    

    (b)
       Mechanics
      of Conversion.
      No
      fractional shares of Common Stock shall be issued upon conversion of Debentures.
      In lieu of any fractional shares to which the Holder would otherwise be
      entitled, the Company shall pay cash equal to such fraction multiplied by the
      then fair market value of a share of Common Stock as determined by the Board
      of
      Directors. Before any Holder of Debentures shall be entitled to convert the
      same
      into full shares of Common Stock, and to receive certificates therefor, such
      Holder shall notify the Company in writing or by Facsimile or electronic
      communication (the “Conversion Notice”) that the Holder elects to convert one or
      more Debentures and (i) agree to surrender Debentures, duly endorsed, at the
      office of the Company or of any transfer agent for the Common Stock when fully
      paid or converted (ii) notify the Company or its transfer agent that such
      Debentures have been lost, stolen or destroyed and agrees to execute and deliver
      to the Company or its transfer agent and agreesatisfactory to the Company to
      indemnify the Company from any loss incurred by it in connection with such
      Debentures, and agree to surrender Debentures, duly endorsed, at the office
      of
      the Company or of any transfer agent for the Common Stock when fully paid or
      converted.

     

    The
      Company shall, within three (3) business days after receipt of the Conversion
      Notice, issue and deliver at such office to such Holder, a certificate or
      certificates for the number of shares of Common Stock to which such Holder
      shall
      be entitled as aforesaid and a check payable to the Holder in the amount of
      any
      cash amounts payable as the result of a conversion into fractional shares of
      Common Stock; provided,
      however,
      that if
      the conversion is in connection with an underwritten offer of securities
      registered pursuant to the Securities Act or a merger, sale or liquidation
      of
      the Company, the conversion may, at the option of any Holder tendering
      Debentures for conversion, be conditioned upon the closing of such transaction,
      in which event the person(s) entitled to receive the Common Stock issuable
      upon
      such conversion shall not be deemed to have converted such Debentures until
      immediately prior to the closing of such transaction. In the event that the
      certificate or certificates for the number of shares of Common Stock to which
      such Holder shall be entitled upon conversion shall not be timely delivered
      as
      required in this paragraph, or within one day thereafter, the Company shall
      pay
      to each Holder whose certificates were not timely delivered, upon written demand
      therefore, an amount equal to $100.00 for each $10,000 of principal amount
      of
      Debentures for each delay per day beyond the delivery date specified above
      (as
      liquidated damages and not as a penalty).

    

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    (c)  
      Delivery
      of Unlegended Shares.
      Within
      three (3) business days (such third business day being the “Unlegended
      Shares Delivery Date”)
      after
      the business day on which the Company has received (i) a notice that Shares
      or
      Warrant Shares or any other Common Shares held by a Holder have been sold
      pursuant to the Registration Statement or Rule 144 under the 1933 Act, (ii)
      a
      representation that the prospectus delivery requirements, or the requirements
      of
      Rule 144, as applicable and if required, have been satisfied, and (iii) the
      original share certificates representing the Common Shares that have been sold,
      and (iv) in the case of sales under Rule 144, customary representation letters
      of the Holder and/or Holder’s broker regarding compliance with the requirements
      of Rule 144, the Company at its expense, (y) shall deliver, and shall cause
      legal counsel selected by the Company to deliver to its transfer agent (with
      copies to Holder) an appropriate instruction and opinion of such counsel,
      directing the delivery of Common Shares without any legends including the legend
      set forth in Section 4(i)
      above
      (the “Unlegended
      Shares”);
      and
      (z) cause the transmission of the certificates representing the Unlegended
      Shares together with a legended certificate representing the balance of the
      submitted Shares certificate, if any, to the Holder at the address specified
      in
      the notice of sale, via express courier, by electronic transfer or otherwise
      on
      or before the Unlegended Shares Delivery Date.  

    

    In
      the
      event the Shares are electronically transferable, then delivery of the Shares
      must
      be made
      by electronic transfer provided request for such electronic transfer has been
      made by the Holder and the Holder has complied with all applicable securities
      laws in connection with the sale of the Common Stock received upon conversion,
      including, without limitation, the prospectus delivery requirements.  
A Debenture representing the balance of the Debenture not so converted will
      be
      provided by the Company to the Holder if requested by Holder, provided the
      Holder delivers the original Debenture to the Company. In the event that a
      Holder elects not to surrender a Debenture for reissuance upon partial payment
      or conversion, the Holder hereby agrees to indemnify and hold harmless the
      Company against any and all loss or damage attributable to a third-party claim
      in an amount in excess of the actual amount then due under the
      Debenture. In
      the
      event that Unlegended Shares shall not be timely delivered as required in this
      paragraph (or within five days thereof), or within one day thereafter, the
      Company shall pay to each Holder whose certificates were not timely delivered,
      upon written demand therefore, an amount equal to $100.00 for each $10,000
      of
      principal amount of Debentures for each delay per day beyond the delivery date
      specified above (as
      liquidated damages and not as a penalty).

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    (d)
       Favored
      Nations Provision.  
      Other than in connection with an Exempt Issuance, if at any time while Debenture
      or Warrants are outstanding the Company shall offer, issue or agree to issue
      any
      Common Shares or securities convertible into or exercisable for Common Shares
      (or modify any of the foregoing which may be outstanding) to any person or
      entity at a price per share or conversion or exercise price per share which
      shall be less than the Conversion Price in respect of the Shares, or if less
      than the Warrant exercise price in respect of the Warrant Shares, without the
      consent of Holders of 85% of the principal amount of outstanding Debentures
      for
      the Debentures, or holders of 85% of the outstanding Warrants proposed to be
      affected, then the Conversion Price and/or Warrant exercise price shall
      automatically be adjusted to such other lower issue price.  The Holder is
      granted the registration rights described in the Registration Rights
      Agreement in relation to additional Common Shares which are issuable upon
      conversion of the Debenture and exercise of the Warrants as a result of the
      reduction in the Conversion Price and Warrant exercise price except that the
      Filing Date and Effective Date vis-à-vis such additional Common Shares shall be,
      respectively, the thirtieth (30th)
      and
      sixtieth (60th)
      date
      after the effective date of the reduction of the Conversion Price and Warrant
      exercise price.  For purposes of the issuance and adjustment described in
      this paragraph, the issuance of any security of the Company carrying the right
      to convert such security into Common Shares or of any warrant, right or option
      to purchase Common Shares shall result in the issuance of the additional Common
      Shares upon the sooner of the agreement to or actual issuance of such
      convertible security, warrant, right or option and again at any time upon any
      subsequent issuances of Common Shares upon exercise of such conversion or
      purchase rights if such issuance is at a price lower than the Conversion Price
      or Warrant exercise price in effect upon such issuance.  The rights of the
      Holder set forth in this 4.25(d) are in addition to any other rights the Holder
      has pursuant to this Purchase Agreement, the Debentures, any of the Transaction
      Documents, and any other agreement referred to or entered into in connection
      herewith. 
      

    

    (e)
        Maximum
      Conversion.
      The
      Holder shall not be entitled to convert on a Conversion Date that amount of
      the
      Debenture in connection with that number of Common Shares which would be in
      excess of the sum of (i) the number of Common Shares beneficially owned by
      the
      Holder and its affiliates on a Conversion Date, (ii) any Common Shares issuable
      in connection with the unconverted portion of the Debenture, and (iii) the
      number of Common Shares issuable upon the conversion of the Debenture with
      respect to which the determination of this provision is being made on a
      Conversion Date, which would result in beneficial ownership by the Holder and
      its affiliates of more than 4.99% of the shares of outstanding Common Stock
      of
      the Borrower on such Conversion Date. For the purposes of the provision to
      the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
      shall not be limited to aggregate conversions of only 4.99% and aggregate
      conversion by the Holder may exceed 4.99%. The Holder shall have the authority
      and obligation to determine whether the restriction contained in this Section
      4.25(e) will limit any conversion hereunder and to the extent that the Holder
      determines that the limitation contained in this Section applies, the
      determination of which portion of the Debentures are convertible shall be the
      responsibility and obligation of the Holder. The Holder may waive the conversion
      limitation described in this Section 4.25(e), in whole or in part, upon and
      effective after 61 days prior written notice to the Borrower to increase such
      percentage to up to 9.99%. 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    (f)
       Merger,
      Sale of Assets, etc.
      If the
      Borrower at any time shall consolidate with or merge into or sell or convey
      all
      or substantially all its assets to any other corporation, this Debenture, as
      to
      the unpaid principal portion thereof and accrued interest thereon, shall
      thereafter be deemed to evidence the right to convert the Debenture into such
      number and kind of shares or other securities and property as would have been
      issuable or distributable on account of such consolidation, merger, sale or
      conveyance, upon or with respect to the securities subject to the conversion
      immediately prior to such consolidation, merger, sale or conveyance. The
      foregoing provision shall similarly apply to successive transactions of a
      similar nature by any such successor or purchaser. Without limiting the
      generality of the foregoing, the anti-dilution provisions of this Section shall
      apply to such securities of such successor or purchaser after any such
      consolidation, merger, sale or conveyance. 

    

    (g)
       Reclassification,
      etc.
      If the
      Borrower at any time shall, by reclassification or otherwise, change the Common
      Shares into the same or a different number of securities of any class or classes
      that may be issued or outstanding, this Debenture, as to the unpaid principal
      portion thereof and accrued interest thereon, shall thereafter be deemed to
      evidence the right to convert into an adjusted number of such securities and
      kind of securities as would have been issuable as the result of such change
      with
      respect to the Common Shares immediately prior to such reclassification or
      other
      change. 

    

    (h)
       Adjustments
      for Subdivisions or Combinations of Common Stock.
      In the
      event the outstanding shares of Common Stock shall be subdivided (by stock
      split, by payment of a stock dividend or otherwise), into a greater number
      of
      shares of Common Stock, the applicable Conversion Price in effect immediately
      prior to such subdivision shall, concurrently with the effectiveness of such
      subdivision, be proportionately decreased. In the event the outstanding shares
      of Common Stock shall be combined (by reclassification or otherwise) into a
      lesser number of shares of Common Stock, the applicable Conversion Price in
      effect immediately prior to such combination shall, concurrently with the
      effectiveness of such combination, be proportionately increased.

     

    (i)
       No
      Impairment.
      The
      Company will not through any reorganization, transfer of assets, merger,
      dissolution, issue or sale of securities or any other voluntary action, avoid
      or
      seek to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by the Company but will at all times in good faith assist
      in the carrying out of all the provisions of this Section 4.25 and in the
      taking of all such action as may be necessary or appropriate in order to protect
      the Conversion Rights against impairment.

     

    (j)
       Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment of the applicable Conversion
      Price pursuant to this Section 4.25, the Company at its expense shall
      promptly compute such adjustment or readjustment in accordance with the terms
      hereof and furnish to each Holder of an outstanding Exchange Debenture or
      Purchased Debenture, as the case may be, a certificate setting forth such
      adjustment or readjustment and showing in detail the facts upon which such
      adjustment or readjustment is based. The Company shall, upon the written request
      at any time of any Holder, furnish or cause to be furnished to such Holder
      a
      like certificate setting forth (i) such adjustments and readjustments, (ii)
      the
      applicable Conversion Price at the time in effect and (iii) the number of
      shares of Common Stock and the amount, if any, of other property which at the
      time would be received upon the conversion of the Debentures, including the
      Debenture held by the requesting Holder.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    (k)
       Waiver
      of Adjustment of Conversion Price.
      Notwithstanding anything herein to the contrary, any downward adjustment of
      the
      Purchased Debenture Conversion Price (and the corresponding Exchange Debenture
      Conversion Price) may be waived, either prospectively or retroactively and
      either generally or in a particular instance, by the consent or vote of the
      Holders of 85% of the principal amount of Purchased Debentures and the Exchange
      Debentures (voting together as a separate class). Any such waiver shall bind
      all
      present and future Holders of the Purchased Debentures and the Exchange
      Debentures.

     

    (l)
       Issue
      Taxes.
      The
      Company shall pay any and all issue and other taxes that may be payable in
      respect of any issue or delivery of the shares of Common Stock on conversion
      of
      Debentures pursuant hereto.

     

    (m)
       Mandatory
      Conversion.
      Upon
      the election of the Company, given by written notice delivered to all Holders
      (“Mandatory Conversion Notice”), the outstanding Debentures shall be converted
      into Common Stock in accordance with this Agreement if (i) the Registration
      Statement described in the Registration Rights Agreement is effective and
      available for use by the Holders on the date the Mandatory Conversion Notice
      is
      given by the Company, (ii) the closing price of the Common Stock is at least
      three (3) times the then current Conversion Price for each of the 20 consecutive
      trading days immediately preceding the date on which the Mandatory Conversion
      Notices is given by the Company, and (iii) the average daily trading volume
      for
      the Common Stock during such 20 consecutive trading day period immediately
      preceding the date on which the Mandatory Conversion Notice is given exceeded
      100,000 shares.

     

    4.26 Preemptive
      Right/Right of First Refusal.

     

    (a) Notice
      of Sale.
      For as
      long as Debentures are outstanding, if the Company desires to issue and sell
      shares of its capital stock or rights, options or other securities exercisable
      for or convertible into shares of its capital stock, then the Company shall
      first notify each Holder of Debentures of the material terms of such proposed
      sale (such notice, a “Company Issuance Notice”).

     

    (i) Right
      of First Refusal.
      The
      Company shall then permit each Holder of Debentures to acquire, at the time
      of
      the closing of such sale, such number of the shares of capital stock or other
      securities as would enable such Holder to maintain its percentage of equity
      ownership (calculated on an as-converted basis, assuming the conversion of
      all
      the Debentures) in the Company following such issuance at a level held by it
      immediately prior to such issuance (assuming conversion of the Debentures held
      by such Holder). The Holders shall each have twenty (20) days after the delivery
      of any Company Issuance Notice to elect by notice to the Company to purchase
      such shares or securities at the price and upon the terms and conditions stated
      in such notice at the time of the closing of such sale. 

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    (ii) Exceptions.
      The
      rights set forth in this Section 4.26 shall not apply to the issuance of shares
      or grant of options or warrants (including shares issuable upon exercise of
      such
      options or warrants) (i) that are an “Exempt Issuance” as defined above, or (ii)
      that are issued pursuant to acquisitions, mergers, purchases of assets or
      similar transactions; provided that in each such instance the issuance is
      approved by the directors of the Company. The rights set forth in this Section
      4.26 shall terminate upon completion of a Qualified Public Offering by the
      Company.

     

    4.27 Notices.
      Any
      notice required by the provisions of this Article IV to be given to the Holders
      of Debentures shall be deemed given if deposited in the United States mail,
      postage prepaid, and addressed to each Holder of record at such Holder’s address
      appearing on the books of the Company. 

     

    4.28
       Confidentiality
      of Identification of Holders.
      The
      Company shall maintain as confidential the identity of all Holders (except
      as
      identification may be required in registrations or other filings required by
      the
      Securities Exchange Act of 1934, as amended.)

     

    4.29 Notice
      of Stop Orders.
      The
      Company shall immediately, but not later than within two business days, notify
      each Holder of the receipt of any Stop Order or similar order of any
      governmental agency. 

     

    4.30
       No
      Interest in Excess of Legal Rate.
      Nothing
      contained herein or in any document referred to herein or delivered in
      connection herewith shall be deemed to establish or require the payment of
      a
      rate of interest or other charges in excess of the maximum permitted by
      applicable law.  In the event that the rate of interest to be paid or other
      charges hereunder exceed the maximum permitted by such law, any payments in
      excess of such maximum shall be credited against amounts owed by the Company
      to
      the Holder and thus refunded to the Company.

     

     4.31 Injunction
      Posting of Bond.
      In the
      event a Holder shall elect to convert a Debenture or part thereof or exercise
      the Warrant in whole or in part, the Company may not refuse conversion or
      exercise based on any claim that such Holder or any one associated or affiliated
      with such Holder has been engaged in any violation of law, or for any other
      reason, unless, an injunction from a court, on notice, restraining and or
      enjoining conversion of all or part of such Debenture or exercise of all or
      part
      of such Warrant shall have been sought and obtained by the Company
      or at
      the Company’s request or with the Company’s assistance, and
      the
      Company has posted a surety bond for the benefit of such Holder in the amount
      of
      120% of the outstanding principal and interest of the Debenture, or aggregate
      purchase price of the Shares and Warrant Shares which are sought to be subject
      to the injunction, which bond shall remain in effect until the completion of
      arbitration/litigation of the dispute and the proceeds of which shall be payable
      to such Holder to the extent Holder obtains judgment in Holder’s
      favor.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    4.32 Buy-In.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      deliver to the Holder such shares issuable upon conversion of a Debenture by
      the
      Delivery Date, or fails to deliver Unlegended Shares by the Unlegended Share
      Delivery Date and if after seven (7) business days after the Delivery Date,
      or
      the Unlegended Share Delivery Date, as appropriate, the Holder or a broker
      on
      the Holder’s behalf, purchases (in an open market transaction or otherwise)
      Common Shares to deliver in satisfaction of a sale by such Holder of the Common
      Shares which the Holder was entitled to receive upon such conversion (a
      "Buy-In"),
      then
      the Company shall pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (A) the Holder's
      total purchase price (including brokerage commissions, if any) for the Common
      Shares so purchased exceeds (B) the aggregate principal and/or interest amount
      of the Debenture for which such conversion was not timely honored,
      together with interest thereon at a rate of 15% per annum, accruing until such
      amount and any accrued interest thereon is paid in full (which amount shall
      be
      paid as liquidated damages and not as a penalty). For
      example, if the Holder purchases Common Shares having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted conversion of $10,000
      of
      Debenture principal and/or interest, the Company shall be required to pay the
      Holder $1,000,
      plus interest. The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In.

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1 Termination. 
      This Agreement may be terminated by any Holder, as to such Holder’s obligations
      hereunder only and without any effect whatsoever on the obligations between
      the
      Company and the other Holders, by written notice to the other parties, if the
      Closing and the Exchange have not been consummated on or before December 31,
      2006; provided,
      however,
      that no
      such termination will affect the right of any party to sue for any breach by
      the
      other party (or parties).

     

    5.2 Fees
      and Expenses.
      The
      Company shall deliver, prior to the Closing, a completed and executed copy
      of
      the Closing Statement, attached hereto as Annex
      A.
      Except
      as expressly set forth in the Transaction Documents to the contrary, each party
      shall pay the fees and expenses of its advisers, counsel, accountants and other
      experts, if any, and all other expenses incurred by such party incident to
      the
      negotiation, preparation, execution, delivery and performance of this Agreement.
      The Company shall pay all transfer agent fees, stamp taxes and other taxes
      and
      duties levied in connection with the delivery of any Securities.

     

    5.3 Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    5.4 Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m. (New York City time) on a Business
      Day,
      (b) the next Business Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto on a day that is not a Business Day or
      later
      than 5:30 p.m. (New York City time) on any Business Day, (c) the second Business
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

     

    5.5 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each Holder
      or, in the case of a waiver, by the party against whom enforcement of any such
      waiver is sought. No waiver of any default with respect to any provision,
      condition or requirement of this Agreement shall be deemed to be a continuing
      waiver in the future or a waiver of any subsequent default or a waiver of any
      other provision, condition or requirement hereof, nor shall any delay or
      omission of either party to exercise any right hereunder in any manner impair
      the exercise of any such right.

     

    5.6 Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    5.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Holder. Any Holder may assign any or all of its rights under
      this Agreement to any Person to whom such Holder assigns or transfers any
      Securities, provided such transferee agrees in writing to be bound, with respect
      to the transferred Securities, by the provisions hereof that apply to the
“Holders.”

     

    5.8 No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.11.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    5.9 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of New York. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of New York, borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or inconvenient venue for such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law. The parties hereby waive all rights to a trial by jury. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding.

     

    5.10 Survival.
      The
      representations and warranties contained herein shall survive the Closing and
      the delivery, and/or Exchange of the Securities, as applicable for the
      applicable statue of limitations.

     

    5.11 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) this Agreement
      with the same force and effect as if such facsimile signature page were an
      original thereof.

     

    5.12 Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefore, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    5.13 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Holder exercises
      a right, election, demand or option under a Transaction Document and the Company
      does not timely perform its related obligations within the periods therein
      provided, then such Holder may rescind or withdraw, in its sole discretion
      from
      time to time upon written notice to the Company, any relevant notice, demand
      or
      election in whole or in part without prejudice to its future actions and
      rights.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    5.14 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefore, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Securities.

     

    5.15 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Holders and the Company will
      be
      entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be adequate.

     

    5.16 Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Holder pursuant
      to
      any Transaction Document or a Holder enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

     

    5.17 Usury.
      To the
      extent it may lawfully do so, the Company hereby agrees not to insist upon
      or
      plead or in any manner whatsoever claim, and will resist any and all efforts
      to
      be compelled to take the benefit or advantage of, usury laws wherever enacted,
      now or at any time hereafter in force, in connection with any claim, action
      or
      proceeding that may be brought by any Holder in order to enforce any right
      or
      remedy under any Transaction Document. Notwithstanding any provision to the
      contrary contained in any Transaction Document, it is expressly agreed and
      provided that the total liability of the Company under the Transaction Documents
      for payments in the nature of interest shall not exceed the maximum lawful
      rate
      authorized under applicable law (the “Maximum
      Rate”),
      and,
      without limiting the foregoing, in no event shall any rate of interest or
      default interest, or both of them, when aggregated with any other sums in the
      nature of interest that the Company may be obligated to pay under the
      Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
      contract rate of interest allowed by law and applicable to the Transaction
      Documents is increased or decreased by statute or any official governmental
      action subsequent to the date hereof, the new maximum contract rate of interest
      allowed by law will be the Maximum Rate applicable to the Transaction Documents
      from the Effectiveness Date forward, unless such application is precluded by
      applicable law. If under any circumstances whatsoever, interest in excess of
      the
      Maximum Rate is paid by the Company to any Holder with respect to indebtedness
      evidenced by the Transaction Documents, such excess shall be applied by such
      Holder to the unpaid principal balance of any such indebtedness or be refunded
      to the Company, the manner of handling such excess to be at such Holder’s
      election.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    5.18 Independent
      Nature of Holders’ Obligations and Rights.
      The
      obligations of each Holder under any Transaction Document are several and not
      joint with the obligations of any other Holder, and no Holder shall be
      responsible in any way for the performance of the obligations of any other
      Holder under any Transaction Document. Nothing contained herein or in any
      Transaction Document, and no action taken by any Holder pursuant thereto, shall
      be deemed to constitute the Holders as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Holders
      are in any way acting in concert or as a group with respect to such obligations
      or the transactions contemplated by the Transaction Documents. Each Holder
      shall
      be entitled to independently protect and enforce its rights, including without
      limitation the rights arising out of this Agreement or out of the other
      Transaction Documents, and it shall not be necessary for any other Holder to
      be
      joined as an additional party in any proceeding for such purpose. Each Holder
      has been represented by its own separate legal counsel in their review and
      negotiation of the Transaction Documents. The Company has elected to provide all
      Holders with the same terms and Transaction Documents for the convenience of
      the
      Company and not because it was required or requested to do so by the
      Holders.

     

    5.19 Liquidated
      Damages.
      The
      Company’s obligations to pay any partial liquidated damages or other amounts
      owing under the Transaction Documents is a continuing obligation of the Company
      and shall not terminate until all unpaid partial liquidated damages and other
      amounts have been paid notwithstanding the fact that the instrument or security
      pursuant to which such partial liquidated damages or other amounts are due
      and
      payable shall have been canceled.

     

    5.20 Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction Documents and, therefore, the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

     5.21 Currency.
      Unless
      stated otherwise, all references to dollars and the symbol “$” in the
      Transaction Documents shall mean United States dollars.

     

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      
        	
                USTELEMATICS,
                  INC.

              	
                Address
                  for Notice:

              
	
                 

                 

              	
                 

              	 
	
                By:  

              	
                 

              	
                335
                  Richert Drive

                Wood
                  Dale, IL 60109

                Attn:
                  Howard Leventhal

                Fax:
                  (312) 896-9235

              
	 	
                
                  

                

                Name:
                  Howard E. Leventhal

                Title:
                  Chief Executive Officer,
                  President

              

      

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR HOLDER FOLLOWS]

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    HOLDER
      SIGNATURE PAGES TO USTELEMATICS, INC. 

    SECURITIES
      PURCHASE AGREEMENT

    

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

     

    Name
      of
      Holder:
      ____________________________________________________________

    Signature
      of Authorized Signatory of Holder:
      _____________________________________

    Name
      of
      Authorized Signatory:
      ________________________________________________

    Title
      of
      Authorized Signatory:
      _________________________________________________

    Email
      Address of
      Holder:_____________________________________________________

    

    Address
      for Notice of Holder:  

     

    
 

    Address
      for Delivery of Securities for Holder (if not same as above): 

     

    

    

    Subscription
      Amount: $_______________

    

    Principal
      Amount of Bridge Debentures exchanged (if applicable): $
      ________________

     

    
      	
              Investment
                Funds to be paid to the Escrow Agent shall be delivered by wire transfer
                to:

               

              HSBC
                Bank USA, National Association

              452
                Fifth Avenue

              New
                York, NY 10018

              ABA#
                021-001-088

              Account#
                002-600-161

              Re:
                Axiom-Mobilier Escrow/reference # 10-879419

              Attention:
                Corporate Trust and Loan Agency

            

    

    

    [SIGNATURE
      PAGES CONTINUE]

     

    
      
        
        

      

      
        47Exhibit
      10.2

    

    Exhibit
      F

    

    COLLATERAL
      AGENT AGREEMENT

    

    COLLATERAL
      AGENT AGREEMENT
      (this “Agreement”)
      dated
      as of December 7, 2006, among Axiom Capital Management, Inc. (the “Collateral
      Agent”),
      and
      the parties identified on Schedule A hereto (each, individually, a “Lender”
and
      collectively, the “Lenders”),
      who
      hold or will acquire 9% Secured Convertible Debentures due December 7, 2008
      issued or to be issued by USTelematics, Inc. (“Parent”), a Delaware corporation,
      at or about the date of this Agreement as described in the Security Agreement
      referred to in Section 1(a) below (collectively herein the “Debentures”).

    

    WHEREAS,
      the Lenders have made, are making and will be making loans to Parent, as
      evidenced by the Debentures, to be secured by certain collateral;
      and

    

    WHEREAS,
      it is desirable to provide for the orderly administration of such collateral
      by
      requiring each Lender to appoint the Collateral Agent, and the Collateral Agent
      has agreed to accept such appointment and to receive, hold and deliver such
      collateral, all upon the terms and subject to the conditions hereinafter set
      forth; and

    

    WHEREAS,
      it is desirable to allocate the enforcement of certain rights of the Lenders
      under the Debentures for the orderly administration thereof.

    

    NOW,
      THEREFORE, in consideration of the premises set forth herein and for other
      good
      and valuable consideration, the parties hereto agree as follows:

    

    1. Collateral.

    

    (a) Contemporaneously
      with the execution and delivery of this Agreement by the Collateral Agent and
      the Lenders, (i) the Collateral Agent has or will have entered into an Amended
      and Restated Security Agreement among the Collateral Agent, Parent and
      ______________ and _______________ (each a “Guarantor” and together with Parent,
“Debtors”) (the “Security
      Agreement”),
      regarding the grant of a security interest in assets owned by Debtors (such
      assets are referred to herein and in the Security Agreement as the “Collateral”)
      to the
      Collateral Agent, for the benefit of the Lenders and (ii) Parent is issuing
      the
      Debentures to the Lenders pursuant to a Securities Purchase Agreement dated
      at
      or about the date of this Agreement (the “Securities
      Purchase Agreement”).
      Collectively, the Security Agreement, the Debentures and Securities Purchase
      Agreement and other agreements referred to therein are referred to herein as
      “Borrower
      Documents”.

    

    (b) The
      Collateral Agent hereby acknowledges that any Collateral held by the Collateral
      Agent is held for the benefit of the Lenders in accordance with this Agreement
      and the Borrower Documents. No reference to the Borrower Documents or any other
      instrument or document shall be deemed to incorporate any term or provision
      thereof into this Agreement unless expressly so provided.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    (c) The
      Collateral Agent is to distribute in accordance with the Borrower Documents
      any
      proceeds received from the Collateral which are distributable to the Lenders
      in
      proportion to their respective interests in the Obligations as defined in the
      Security Agreement.

    

    2. Appointment
      of the Collateral Agent.

    

    The
      Lenders hereby appoint the Collateral Agent (and the Collateral Agent hereby
      accepts such appointment) to take any action including, without limitation,
      the
      registration of any Collateral in the name of the Collateral Agent or its
      nominees prior to or during the continuance of an Event of Default (as defined
      in the Borrower Documents), the exercise of voting rights upon the occurrence
      and during the continuance of an Event of Default, the application of any cash
      collateral received by the Collateral Agent to the payment of the Obligations,
      the making of any demand under the Borrower Documents, the exercise of any
      remedies given to the Collateral Agent pursuant to the Borrower Documents and
      the exercise of any authority pursuant to the appointment of the Collateral
      Agent as an attorney-in-fact pursuant to the Security Agreement that the
      Collateral Agent deems necessary or proper for the administration of the
      Collateral pursuant to the Security Agreement. Upon disposition of the
      Collateral in accordance with the Borrower Documents, the Collateral Agent
      shall
      promptly distribute any cash or Collateral in accordance with Section 10.4
      of
      the Security Agreement. Lenders must notify Collateral Agent in writing of
      the
      issuance of any Debentures to Lenders by Parent not listed on Schedule A. The
      Collateral Agent will not be required to act hereunder in connection with
      Debentures the issuance of which was not disclosed in writing to the Collateral
      Agent nor will the Collateral Agent be required to act on behalf of any assignee
      of Debentures unless notice of such assignment has been provided to the
      Collateral Agent pursuant to Section 11(f).

    

    3. Action
      by the Majority in Interest.

    

    (a) Certain
      Actions.
      Each of
      the Lenders covenants and agrees that only a Majority in Interest shall have
      the
      right, but not the obligation, to undertake the following actions (it being
      expressly understood that less than a Majority in Interest hereby expressly
      waive the following rights that they may otherwise have under the Borrower
      Documents):

    

    (i) Acceleration.
      If an
      Event of Default occurs, after the applicable cure period, if any, a Majority
      in
      Interest may, on behalf of all the Lenders, instruct the Collateral Agent to
      provide to Debtors notice to cure such default and/or declare the unpaid
      principal amount of the Debentures to be due and payable, together with any
      and
      all accrued interest thereon and all costs payable pursuant to such
      Debentures;

    

    (ii) Enforcement.
      Upon
      the occurrence of any Event of Default after the applicable cure period, if
      any,
      a Majority in Interest may instruct the Collateral Agent to proceed to protect,
      exercise and enforce, on behalf of all the Lenders, their rights and remedies
      under the Borrower Documents against Debtors, and such other rights and remedies
      as are provided by law or equity;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (iii) Waiver
      of Past Defaults.
      A
      Majority in Interest may instruct the Collateral Agent to waive any Event of
      Default by written notice to Debtors, and the other Lenders; and

    

    (iv) Amendment.
      A
      Majority in Interest may instruct the Collateral Agent to waive, amend,
      supplement or modify any term, condition or other provision in the Debenture
      or
      Borrower Documents in accordance with the terms of the Debenture or Borrower
      Documents so long as such waiver, amendment, supplement or modification is
      made
      with respect to all of the Debentures and with the same force and effect with
      respect to each of the Lenders.

    

    (b) Permitted
      Subordination.
      A
      Majority in Interest may instruct the Collateral Agent to agree to subordinate
      any Collateral to any claim and may enter into any agreement with Debtors to
      evidence such subordination; provided,
      however,
      that
      subsequent to any such subordination, each Debenture shall remain pari passu
      with
      each other Debenture held by the Lenders.

    

    (c) Further
      Actions.
      A
      Majority in Interest may instruct the Collateral Agent to take any action that
      it may take under this Agreement by instructing the Collateral Agent in writing
      to take such action on behalf of all the Lenders.

    

    (d) Majority
      in Interest.
      For so
      long as any Debentures remain outstanding, a Majority in Interest for the
      purposes of this Agreement and the Security Agreement shall mean Lenders who
      hold not less than ninety percent (90%) of the outstanding principal amount
      of
      the Debentures.

    

    4. Power
      of Attorney.

    

    (a) To
      effectuate the terms and provisions hereof, the Lenders hereby appoint the
      Collateral Agent as their attorney-in-fact (and the Collateral Agent hereby
      accepts such appointment) for the purpose of carrying out the provisions of
      this
      Agreement including, without limitation, taking any action on behalf of, or
      at
      the instruction of, the Majority in Interest at the written direction of the
      Majority in Interest and executing any consent authorized pursuant to this
      Agreement and taking any action and executing any instrument that the Collateral
      Agent may deem necessary or advisable (and lawful) to accomplish the purposes
      hereof.

    

    (b) All
      acts
      done under the foregoing authorization are hereby ratified and approved and
      neither the Collateral Agent nor any designee nor agent thereof shall be liable
      for any acts of commission or omission, for any error of judgment, for any
      mistake of fact or law except for acts of gross negligence or willful
      misconduct.

    

    (c) This
      power of attorney, being coupled with an interest, is irrevocable while this
      Agreement remains in effect.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    5. Expenses
      of the Collateral Agent.
      The
      Lenders shall pay any and all reasonable costs and expenses incurred by the
      Collateral Agent, including, without limitation, reasonable costs and expenses
      relating to all waivers, releases, discharges, satisfactions, modifications
      and
      amendments of this Agreement, the administration and holding of the Collateral,
      insurance expenses, and the enforcement, protection and adjudication of the
      parties’ rights hereunder by the Collateral Agent, including, without
      limitation, the reasonable disbursements, expenses and fees of the attorneys
      the
      Collateral Agent may retain, if any, each of the foregoing in proportion to
      their respective holdings of Debentures.

    

    6. Reliance
      on Documents and Experts.
      The
      Collateral Agent shall be entitled to rely upon any notice, consent,
      certificate, affidavit, statement, paper, document, writing or communication
      (which may be by telegram, cable, telex, telecopier, or telephone) reasonably
      believed by it to be genuine and to have been signed, sent or made by the proper
      person or persons, and upon opinions and advice of its own legal counsel,
      independent public accountants and other experts selected by the Collateral
      Agent.

    

    7. Duties
      of the Collateral Agent; Standard of Care.

    

    (a) The
      Collateral Agent’s only duties are those expressly set forth in this Agreement,
      and the Collateral Agent hereby is authorized to perform those duties in
      accordance with commercially reasonable practices. The Collateral Agent may
      exercise or otherwise enforce any of its rights, powers, privileges, remedies
      and interests under this Agreement and applicable law or perform any of its
      duties under this Agreement by or through its officers, employees, attorneys,
      or
      agents.

    

    (b) The
      Collateral Agent shall act in good faith and with that degree of care that
      an
      ordinarily prudent person in a like position would use under similar
      circumstances.

    

    (c) Any
      funds
      held by the Collateral Agent hereunder need not be segregated from other funds
      except to the extent required by law. The Collateral Agent shall be under no
      liability for interest on any funds received by it hereunder.

    

    8. Resignation.
      The
      Collateral Agent may resign and be discharged of its duties hereunder at any
      time by giving written notice of such resignation to the other parties hereto,
      stating the date such resignation is to take effect. Within five (5) days of
      the
      giving of such notice, a successor collateral agent shall be appointed by the
      Majority in Interest; provided,
      however,
      that if
      the Lenders are unable to agree upon a successor within such time period and
      are
      unable to notify the Collateral Agent during such period of the identity of
      the
      successor collateral agent, the successor collateral agent may be a person
      designated by the Collateral Agent, and any and all fees of such successor
      collateral agent shall be the joint and several obligation of the Lenders.
      The
      Collateral Agent shall continue to serve until the effective date of the
      resignation or until its successor accepts the appointment and receives the
      Collateral held by the Collateral Agent but shall not be obligated to take
      any
      action hereunder. The Collateral Agent may deposit any Collateral with the
      Supreme Court of the State of New York for New York County or any such other
      court in New York State that accepts such Collateral.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    9. Exculpation.
      The
      Collateral Agent and its officers, employees, attorneys and agents shall not
      incur any liability whatsoever for the holding or delivery of documents or
      the
      taking of any other action in accordance with the terms and provisions of this
      Agreement, for any mistake or error in judgment, for compliance with any
      applicable law or any attachment, order or other directive of any court or
      other
      authority (irrespective of any conflicting term or provision of this Agreement),
      or for any act or omission of any other person engaged by the Collateral Agent
      in connection with this Agreement, unless occasioned by the exculpated person’s
      own gross negligence or willful misconduct; and each party hereto hereby waives
      any and all claims and actions whatsoever against the Collateral Agent and
      its
      officers, employees, attorneys and agents, arising out of or related directly
      or
      indirectly to any or all of the foregoing acts, omissions and circumstances.
      

    

    10. Indemnification.
      The
      Lenders hereby agree to indemnify, reimburse and hold harmless the Collateral
      Agent and its directors, officers, employees, attorneys and agents, jointly
      and
      severally, from and against any and all claims, liabilities, losses and expenses
      that may be imposed upon, incurred by, or asserted against any of them, arising
      out of or related directly or indirectly to this Agreement or the Collateral,
      except such as are occasioned by the indemnified person’s own gross negligence
      or willful misconduct.

    

    11. Miscellaneous.

    

    (a) Rights
      and Remedies Not Waived.
      No act,
      omission or delay by the Collateral Agent shall constitute a waiver of the
      Collateral Agent’s rights and remedies hereunder or otherwise. No single or
      partial waiver by the Collateral Agent of any default hereunder or right or
      remedy that it may have shall operate as a waiver of any other default, right
      or
      remedy or of the same default, right or remedy on a future
      occasion.

    

    (b) Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York without
      regard to
      conflicts
      of laws that
      would result
      in
      the application of the
      substantive laws of another
      jurisdiction.

    

    (c) Waiver
      of Jury Trial and Setoff; Consent to Jurisdiction; Etc.

    

    (i) In
      any
      litigation in any court with respect to, in connection with, or arising out
      of
      this Agreement or any instrument or document delivered pursuant to this
      Agreement, or the validity, protection, interpretation, collection or
      enforcement hereof or thereof, or any other claim or dispute howsoever arising,
      between the Collateral Agent and the Lenders or any Lender, then each Lender,
      to
      the fullest extent it may legally do so, (A) waives the right to interpose
      any
      setoff, recoupment, counterclaim or cross-claim in connection with any such
      litigation, irrespective of the nature of such setoff, recoupment, counterclaim
      or cross-claim, unless such setoff, recoupment, counterclaim or cross-claim
      could not, by reason of any applicable federal or state procedural laws, be
      interposed, pleaded or alleged in any other action; and (B) WAIVES
      TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE
      TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
      OR
      CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
      DAMAGES. EACH LENDER AGREES THAT THIS SECTION 11(c) IS A SPECIFIC AND MATERIAL
      ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE COLLATERAL AGENT WOULD NOT
      ENTER THIS AGREEMENT IF THIS SECTION 11(c) WERE NOT PART OF THIS
      AGREEMENT.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    (ii) Each
      Lender irrevocably consents to the exclusive jurisdiction of any State or
      Federal Court located within the County of New York, State of New York, in
      connection with any action or proceeding arising out of or relating to this
      Agreement or any document or instrument delivered pursuant to this Agreement
      or
      otherwise. In any such litigation, each Lender waives, to the fullest extent
      it
      may effectively do so, personal service of any summons, complaint or other
      process and agree that the service thereof may be made by certified or
      registered mail directed to such Lender at its address for notice determined
      in
      accordance with Section 11(e) hereof. Each Lender hereby waives, to the fullest
      extent it may effectively do so, the defenses of forum non conveniens and
      improper venue.

    

    (d) Admissibility
      of this Agreement.
      Each of
      the Lenders agrees that any copy of this Agreement signed by it and transmitted
      by telecopier for delivery to the Collateral Agent shall be admissible in
      evidence as the original itself in any judicial or administrative proceeding,
      whether or not the original is in existence.

    

    (e) Address
      for Notices.
      Any
      notice or other communication under the provisions of this Agreement shall
      be
      given in writing and delivered in person, by reputable overnight courier or
      delivery service, by facsimile machine (receipt confirmed) with a copy sent
      by
      first class mail on the date of transmissions, or by registered or certified
      mail, return receipt requested, directed to such party’s addresses set forth
      below (or to any new address of which any party hereto shall have informed
      the
      others by the giving of notice in the manner provided herein):

    

    In
      the
      case of the Collateral Agent, to him at:

    

    Axiom
      Capital Management, Inc.

    _________________________________

    _________________________________

    _________________________________

    Telephone:
      ________________________

    Fax:
      _____________________________

    Email:
      ____________________________

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    With
      a
      copy to:

    

    Wollmuth
      Maher & Deutsch, LLP 

    _________________________________

    _________________________________

    _________________________________

    Telephone:
      ________________________

    Fax:
      _____________________________

    Email:
      ____________________________

    

    In
      the
      case of the Lenders, to:

    

    The
      address and telecopier number set forth on 

    Schedule
      A hereto.

    

    In
      the
      case of Debtors, to:

    

    USTelematics,
      Inc.

    335
      Richert Dr.

    Wood
      Dale, IL 60191

    Attn:
      Howard Leventhal, CEO & President

    Fax:
      (312) 896-9235

    Email:
      howard@ustelematics.com

    

    With
      a
      copy by telecopier only to:

    

    Alan
      W.
      Peryam, LLC

    1120
      Lincoln Street, Suite 1000

    Denver,
      CO 80203

    Telephone:
      (303) 866-0900

    Fax:
      (303) 866-0999

    Email:
      alan@awperyam.com

    

    (f) Amendments
      and Modification; Additional Lender.
      No
      provision hereof shall be modified, altered, waived or limited except by written
      instrument expressly referring to this Agreement and to such provision, and
      executed by the parties hereto. Any transferee of a Debenture who acquires
      a
      Debenture after the date hereof will become a party hereto by signing the
      signature page and sending an executed copy of this Agreement to the Collateral
      Agent and receiving a signed acknowledgement from the Collateral
      Agent.

    

    (g) Fee.
      Upon
      the occurrence of an Event of Default, the Lenders collectively shall pay the
      Collateral Agent the sum of $10,000 on account, to apply against an hourly
      fee
      of $350 to be paid to the Collateral Agent by the Lenders for services rendered
      pursuant to this Agreement. All payments due to the Collateral Agent under
      this
      Agreement including reimbursements must be paid when billed. The Collateral
      Agent may refuse to act on behalf of or make a distribution to any Lender who
      is
      not current in payments to the Collateral Agent. Payments required pursuant
      to
      this Agreement shall be pari passu
      to the
      Lenders’ interests in the Debentures. The Collateral Agent is hereby authorized
      to deduct any sums due the Collateral Agent from Collateral in the Collateral
      Agent’s possession.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (h) 
      Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by facsimile signature
      and delivered by facsimile transmission.

    

    (i) Successors
      and Assigns.
      Whenever in this Agreement reference is made to any party, such reference shall
      be deemed to include the successors, assigns, heirs and legal representatives
      of
      such party. No party hereto may transfer any rights under this Agreement, unless
      the transferee agrees to be bound by, and comply with all of the terms and
      provisions of this Agreement, as if an original signatory hereto on the date
      hereof.

    

    (j) Captions:
      Certain Definitions.
      The
      captions of the various sections and paragraphs of this Agreement have been
      inserted only for the purposes of convenience; such captions are not a part
      of
      this Agreement and shall not be deemed in any manner to modify, explain, enlarge
      or restrict any of the provisions of this Agreement. As used in this Agreement
      the term “person”
shall
      mean and include an individual, a partnership, a joint venture, a corporation,
      a
      limited liability company, a trust, an unincorporated organization and a
      government or any department or agency thereof.

    

    (k) Severability.
      In the
      event that any term or provision of this Agreement shall be finally determined
      to be superseded, invalid, illegal or otherwise unenforceable pursuant to
      applicable law by an authority having jurisdiction and venue, that determination
      shall not impair or otherwise affect the validity, legality or enforceability
      (i) by or before that authority of the remaining terms and provisions of this
      Agreement, which shall be enforced as if the unenforceable term or provision
      were deleted, or (ii) by or before any other authority of any of the terms
      and
      provisions of this Agreement.

    

    (l) Entire
      Agreement.
      This
      Agreement contains the entire agreement of the parties and supersedes all other
      agreements and understandings, oral or written, with respect to the matters
      contained herein.

    

    (m) Schedules.
      The
      Collateral Agent is authorized to annex hereto any schedules referred to
      herein.

     

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Collateral Agent Agreement
      to be signed, by their respective duly authorized officers or directly, as
      of
      the date first written above.

    

    “LENDERS”

    
      	 	 	 
	 	 	 
	
              

            	 	
              
                

              

               

               

            
	
              

            	 	
              

            

      	 	 	 
	 	 	
              _______________________________________

              ___________________ Collateral
                Agent

            

    

    
       

    

    Acknowledged:

    

    USTELEMATICS,
      INC.

    For
      Itself and on behalf of the Subsidiaries

    
 

    By:

    
      

    

    Name:
      Howard E. Leventhal

    Title:
      CEO and President

    

    This
      Collateral Agent Agreement may be signed by facsimile signature and delivered
      by

    confirmed
      facsimile transmission.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    SCHEDULE
      A TO COLLATERAL AGENT AGREEMENT

     

    
      	
              LENDER
                NAME AND ADDRESS

            	 	 	
              PRINCIPAL
                AMOUNT OF DEBENTURES

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              TOTALS

            	 	 	 	 

    

     

    
      
        
        

      

      
        10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]