STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT

This stock purchase agreement (this “ Agreement ”), dated as of February 2, 2009, is entered into by and among Pipeline Data Inc., a Delaware corporation, with principal offices located at 1515 Hancock Street, Suite 301, Quincy, MA 02169 (the “ Company ”), and the investors listed on the Schedule of Buyers attached hereto (each, a “ Buyer ” and, collectively, the “ Buyers ”). Capitalized terms used and not defined elsewhere in this Agreement have the respective meanings assigned to such terms in the Appendix hereto.

WHEREAS:

A.        The Company and the Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”).

B.        The Buyers, severally and not jointly, desire to purchase from the Company, and the Company wishes to sell to the Buyers, upon the terms and conditions stated in this Agreement, shares of the Common Stock (defined below) of the Company and shares of the Series A Convertible Preferred Stock of the Company, par value $.001 (the “ Series A Preferred ”), as described in Section 1 . The rights, preferences, terms and conditions of the Series A Preferred are as set forth in the Certificate of Designation, Preferences and Rights of Series A Preferred Stock attached hereto as Exhibit A .

C.        Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering an Investors’ Rights Agreement, in the form attached as Exhibit B (as the same may be amended, supplemented, restated or modified and in effect from time to time, the “ Investors’ Rights Agreement ”), pursuant to which the Company agrees to provide certain registration rights under the 1933 Act, and other rights to the Buyers, with respect to the Shares and the Registrable Securities (as defined in the Investors’ Rights Agreement).

NOW THEREFORE , the Company and each of the Buyers, severally and not jointly, hereby agree as follows:

a.          Purchase and Sale of Shares . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 7 and 8 below, the Company shall issue and sell to each Buyer and each Buyer severally agrees to purchase from the Company the shares of Common Stock and Series A Preferred set forth next to each such Buyer’s name on the Schedule of Buyers attached hereto. The aggregate purchase price for the Shares purchased by each Buyer shall be as set forth opposite such Buyer’s name on the Schedule of Buyers (the “ Purchase Price ”). Upon the effectiveness of amendments to the Certificate of Incorporation of the Company contemplated in Sections 3(b) and 4(m) authorizing 500,000,000 shares of Common Stock, 10,000,000 shares of Preferred Stock, and Preferred Stock having voting and other rights as set forth in the Certificate of Designation, Preferences and Rights of Series B Preferred Stock

attached hereto as Exhibit C (the “ Series B Preferred ”), the Common Stock and Series A Preferred purchased pursuant to this Agreement shall be automatically exchanged for 5,000,000 shares of the Series B Preferred and the Series A Preferred shall be cancelled.

b.          Closing Date . The closing (the “Closing ”) shall be on the date first set forth above, subject to the satisfaction (or waiver) of all of the conditions to the Closing set forth in Sections 7 and 8 (or such later or earlier date as is mutually agreed to by the Company and the Buyers) (the “Closing Date” ). The Closing shall occur remotely via the exchange of electronic signature pages which shall be followed by the exchange of original signature pages via overnight delivery to each party’s principal business address or at such other place as either party designates in writing.

c.          Form of Payment and Delivery of Shares . On the date that is the later of ten (10) days from the Closing Date, the date that this transaction is permitted to close under applicable Securities Laws, or the date that all conditions to Buyers’ obligations to purchase the Shares as set forth in Section 8 are satisfied in full, (i) each Buyer shall pay to the Company the Purchase Price (less the ComVest Fees and Expenses), by wire transfer of immediately available funds in accordance with the Company’s written wire instructions, and (ii) the Company shall deliver (or cause its transfer agent to deliver) to each Buyer certificates representing the Shares that such Buyer is purchasing hereunder on the Closing Date (the “ Share Certificates ”), duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

d.          Failure to Satisfy Conditions to Purchase Shares . In the event all of the conditions to Buyers’ obligations to purchase the Shares as set forth in Section 8 are not satisfied in full within ninety (90) days of the date of this Agreement, the Transaction Documents shall automatically terminate and the Buyers and the Company shall be relieved of any and all obligations under the Transaction Documents, including, but not limited to, any obligation of the Buyers to pay the Purchase Price to the Company. Upon such termination, the Company hereby grants each Buyer a full, complete, and unconditional release from any and all obligations under this Agreement and the Transaction Documents.

Each Buyer represents and warrants, as of the date of this Agreement and as of each Closing Date, with respect to only itself, that:

a.          Investment Purpose . Such Buyer is acquiring the Shares purchased by such Buyer hereunder, for such Buyer’s own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under, or exempted from the registration requirements of, the 1933 Act; provided , however , that by making the representations herein, such Buyer does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

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

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

d.          Information . Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares that have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained in this Agreement or in any of the other Transaction Documents. Such Buyer understands that its investment in the Shares involves a high degree of risk and that it has reviewed the Company’s SEC Documents and the disclosures contained therein, including, without limitation, those set forth under the heading “Risk Factors.” Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.

e.          No Governmental Review . Such Buyer understands that no Governmental Entity has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of an investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

f.          Transfer or Resale . Such Buyer understands that, except as provided in the Investors’ Rights Agreement: (i) the Shares have not been and are not being registered under the 1933 Act or any other Securities Laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that the Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that the Shares can be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act, as amended (or a successor rule thereto) (“ Rule 144 ”); (ii) any sale of the Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or any other Securities Laws; and (iii) except as set forth in the Investors’ Rights Agreement, neither the Company nor any other person is under any obligation to register the Shares under the 1933 Act or any other Securities Laws. Notwithstanding the foregoing provisions of this paragraph, the Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Shares.

g.          Legends . Such Buyer understands that, except as set forth below, the Share Certificates shall bear a restrictive legend in the following form (the “ 1933 Act Legend ”) (and a stop-transfer order may be placed against transfer of such Share Certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Shares, if (i) such Shares are registered for resale under the 1933 Act, (ii) such holder provides the Company with reasonable assurances that the Shares can be sold pursuant to Rule 144(k) promulgated under the 1933 Act (or a successor rule thereto), or (iii) such holder provides the Company reasonable assurances that the Shares have been or are being sold pursuant to Rule 144.

h.          Authorization; Enforcement; Validity . Such Buyer is a validly existing corporation, partnership, limited liability company or other entity and has the requisite corporate, partnership, limited liability or other organizational power and authority to purchase the Shares pursuant to this Agreement. The Transaction Documents entered into by such Buyer have been duly and validly authorized, executed and delivered on behalf of such Buyer and are valid and binding agreements of such Buyer enforceable against such Buyer in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity.

i.           Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers .

j.           No Other Agreements . As of the applicable Closing Date, such Buyer has not, directly or indirectly, made any agreements with the Company relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents.

The Company represents and warrants, as of the date of this Agreement, to each Buyer, with respect to itself both before and after giving effect to the Acquisition, that except as set forth in the Schedules to this Agreement delivered by the Company to Buyer or in the schedules to the Acquisition Agreement:

a.          Organization and Qualification; Subsidiaries . The Company was formed on June 23, 1997. Set forth in Schedule 3(a) is a true and correct list of the Company’s Subsidiaries and the jurisdiction in which each is organized or incorporated, together with the authorized and outstanding Capital Stock or other equity interests of each such entity. Other than with respect to the entities listed on Schedule 3(a) , the Company does not directly own any security, equity interest or beneficial ownership interest in any other Person (including through joint venture or partnership agreements) or have any interest in any other Person. Each of the Company and its Subsidiaries is a corporation, limited liability company, partnership or other entity and is duly organized or formed and validly existing in good standing under the laws of the jurisdiction in which it is incorporated or organized and has the requisite corporate, partnership, limited liability company or other organizational power and authority to own its properties and to carry on its business as now being conducted and as proposed to be conducted by the Company and its Subsidiaries. Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted or proposed to be conducted by the Company and its Subsidiaries will make such qualification necessary, except to the extent that the failure to be so qualified or be in good standing could not have and could not be, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 3(a) , the Company holds all right, title and interest in and to 100% of the Capital Stock, equity or similar interests of each of its Subsidiaries, in each case, free and clear of any Liens (as defined below), including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of free and clear ownership by a current holder, and no such Subsidiary owns capital stock or holds an equity or similar interest in any other Person.

b.          Authorization; Enforcement; Validity . Each of the Company and its Subsidiaries has the requisite corporate or other organizational power and authority to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which such Person is a party and to issue the Shares in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and each of its Subsidiaries and the consummation by the Company and each of its Subsidiaries of the transactions contemplated hereby and thereby, including the issuance of the Shares to be issued at the Closing, have been duly authorized by the respective boards of directors (or a committee thereof), members, managers, trustees, stockholders, other equityholders or holders of beneficial interests, as applicable, of the Company and each of its Subsidiaries, as applicable, and no further consent or authorization is required by the Company, any of its Subsidiaries or any of their respective boards of directors, members, managers, trustees, stockholders, other equityholders or holders of beneficial interests, as applicable. Notwithstanding the foregoing, the parties to this Agreement acknowledge that the Company does not currently have enough authorized shares of Common Stock (as defined below) to satisfy all conversions of Shares of the Series A Preferred. The parties to this Agreement agree that promptly after Closing the Company will prepare the necessary corporate documentation to amend its Certificate of Incorporation and will make the applicable proxy filing pursuant to the applicable Securities Laws and the Buyers shall approve the amendment of the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock to 500,000,000, to increase the number of authorized shares of Preferred Stock to 10,000,000, and to authorize Preferred Stock having the voting and other rights of the Series B Preferred. This Agreement and the other Transaction Documents have been duly executed and delivered by the Company and each of its Subsidiaries

that is a party thereto, and constitute the valid and binding obligations of the Company and each of its Subsidiaries, enforceable against the Company and each of its Subsidiaries in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity.

c.          Capitalization . The authorized Capital Stock of the Company consists of 155,000,000 shares, of which 150,000,000 are designated as Common Stock, par value $.001 (“ Common Stock ”) and 5,000,000 are designated as Preferred Stock, par value $.001 (“ Preferred Stock ”). No shares of Preferred Stock are outstanding. Pursuant to the Certificate of Designation, Preferences and Rights of Series A Preferred Stock, adopted by the Company and attached hereto as Exhibit A , 5,000,000 shares of Preferred Stock are designated as Series A Preferred. Of the Common Stock authorized:

(ii)       12,150,309 shares are reserved for issuance pursuant to the Company’s stock option, restricted stock and employee stock purchase plans described in the SEC Documents (the “ Equity Plans ”), including 12,150,309 shares issuable pursuant to outstanding awards under the Equity Plans;

(iii)      15,463,453 shares are reserved for issuance pursuant the Company’s outstanding warrants described on Schedule 3(c)(iii) (the “ Existing Warrants ”), 11,100,000 of which are reserved for issuance pursuant to warrants related to the Bond Financing (as defined below);

(iv)      28,576,038 shares are reserved for issuance pursuant the Company’s outstanding Convertible Debentures described on Schedule 3(c)(iv) (the “ Convertible Debentures ”) (the convertibility feature of certain Convertible Debentures shall be removed at Closing leaving a single Convertible Debenture convertible into 114,500 shares of Common Stock); and

(v)       483,259 shares are reserved for issuance to Millennium Merchant Services.

No shares of Common Stock are reserved for issuance under any plan, agreement or arrangement, other than shares of Common Stock reserved for issuance under the Equity Plans and with respect to the Existing Warrants, the Convertible Debentures and except as described in the foregoing provisions of this Section 3(c) , there are no shares of Capital Stock, Options, Convertible Securities or other equity securities of the Company authorized, issued or outstanding, and the Company is not under any current or future obligations to issue any such shares of Capital Stock, Options, Convertible Securities or other equity securities of the Company. All of the outstanding and issuable shares of Capital Stock have been, or upon issuance will be, validly issued and are, or upon issuance will be, fully paid and nonassessable. Schedule 3(c) sets forth (x) a list of all outstanding Options, Existing Warrants and Convertible Debentures and the exercise or conversion price for each and (y) the maximum number of securities of the Company or any of its Subsidiaries that may be issued to Millennium Merchant Services.

Except as set forth on Schedule 3(c)(1)-(5) :

(1)       no shares of the Capital Stock of the Company or any of its Subsidiaries are subject to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company or any of its Subsidiaries;

(2)       there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable for, any shares of Capital Stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of Capital Stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable for, any shares of Capital Stock of the Company or any of its Subsidiaries;

(3)       to the Knowledge of the Company, there are no voting trusts, proxies or other agreements, commitments or understandings of any character with respect to the voting of any shares of Capital Stock of the Company or any of its Subsidiaries, and there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Investors’ Rights Agreement);

(4)       there are no outstanding securities or instruments of the Company or any of its Subsidiaries that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;

(5)       there are no securities or instruments containing anti-dilution or similar provisions that will or may be triggered by the issuance of the Shares;

(6)       the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and

(7)       to the Company’s Knowledge, no officer or director of the Company or beneficial owner of any of the Company’s outstanding Common Stock has pledged Common Stock in connection with a margin account or other loan secured by such Common Stock.

The Company has furnished to each Buyer true and correct copies of:

(X)      The Company’s Certificate of Incorporation, as amended and in effect (the “ Certificate of Incorporation ”); and

All of the equity interests of each of the Subsidiaries are certificated or otherwise represented in tangible form.

d.          Issuance of Securities . The Shares are duly authorized. Subject to the need to increase the number of authorized shares of Common Stock as discussed in Section 3(b) hereof, upon issuance of the Shares, such Shares and Conversion Shares will be validly issued, fully paid and nonassessable and free from taxes and Liens with respect to the issuance thereof, with the holders being entitled to all rights accorded to a holder of Series A Preferred or Common Stock, as applicable. The issuance by the Company of the Shares is exempt from registration under the 1933 Act and any other applicable Securities Laws.

e.          No Conflicts . Except as set forth on Schedule 3(e) , the execution and delivery of this Agreement and the other Transaction Documents by the Company and each of its Subsidiaries, the performance by the Company and each of its Subsidiaries of its obligations hereunder and thereunder and the consummation by the Company and each of its Subsidiaries of the transactions contemplated hereby and thereby (including the reservation for issuance and the issuance of the Shares) will not:

(i)        result in a violation of the certificate or articles of incorporation, certificate or articles of organization, bylaws, operating agreement, partnership agreement or any other governing documents, as applicable, of any such Person;

(ii)       conflict with, or constitute a breach or default (or an event which, with the giving of notice or passage of time or both, constitutes or would constitute a breach or default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or other remedy with respect to, any agreement, indenture, instrument or other document to which any such Person is a party or by which such Person is bound; or

(iii)      result in a violation of any Law, rule, regulation, order, judgment or decree (including Securities Laws and the rules and regulations, if any, of the Principal Market) applicable to any such Person or by which any property or asset of any such Person is bound or affected.

Neither the Company nor any of its Subsidiaries is in violation of any term of its certificate or articles of incorporation, certificate or articles of organization, bylaws, operating agreement, partnership agreement or any other governing document, as applicable. Neither the Company nor any of its Subsidiaries is or has been in violation of any term of or in default under (or with the giving of notice or passage of time or both would be in violation of or default under) (x) any material contract, agreement, mortgage, indebtedness, indenture, instrument, document, judgment, decree or order of the Company or its Subsidiaries or (y) any Law applicable to the Company or its Subsidiaries. Except for the filings and listings expressly contemplated by the Investors’ Rights Agreement and the filing of the Certificates of Designation, neither the Company nor any of its Subsidiaries is, has been, or will be required to obtain any consent, authorization or order of, or make any filing or registration with, any court or Governmental Entity in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance with the terms hereof or thereof. All consents,

authorizations, orders, filings and registrations that the Company or any of its Subsidiaries is or has been required to obtain as described in the preceding sentence have been obtained or effected on or prior to the date of this Agreement and prior to the date of the effectiveness of such requirement.

(i)        Since December 31, 2007, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date this representation is made (including all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein) being referred to herein as the “ SEC Documents ” and the Company’s consolidated balance sheet as of September 30, 2008, as included in the Company’s quarterly report on Form 10-Q for the period then ended, as filed with the SEC on November 14, 2008 and as amended on November 18, 2008, being referred to herein as the “ Most Recent Balance Sheet ”). Each of the SEC Documents was filed with the SEC via the SEC’s EDGAR system within the time frames prescribed by the SEC for the filing of such SEC Documents such that each filing was timely filed with the SEC (with giving effect to any extensions of time permitted by Rule 12b-25 under the 1934 Act). As of their respective dates, the SEC Documents complied in all material respects with the Securities Laws. None of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Since the filing of each of the SEC Documents, no event has occurred that would require an amendment or supplement to any such SEC Document and as to which such an amendment or supplement has not been filed and made publicly available on the SEC’s EDGAR system no less than five (5) Business Days prior to the date this representation is made. Except as set forth on Schedule 3(f)(i) , the Company has not received any written comments from the SEC staff that have not been resolved to the satisfaction of the SEC staff.

(ii)       As of their respective dates, the consolidated financial statements of the Company and its Subsidiaries included in the SEC Documents complied in all material respects with applicable accounting requirements and the Securities Laws with respect thereto. Such consolidated financial statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes) and fairly present in all material respects the financial position of the Company and its Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended in accordance with GAAP (subject, in the case of unaudited statements, to normal year-end audit adjustments that are not material individually or in the aggregate).

(iii)      Since December 31, 2007, none of the Company, its Subsidiaries and their respective officers, directors and Affiliates or, to the Company’s Knowledge, any stockholder of the Company has made any filing with the SEC or issued any press

release on behalf of the Company or any of its Subsidiaries or otherwise relating to the Company or any of its Subsidiaries that contains any untrue statement of a material fact or omits any statement of material fact necessary in order to make the statements therein, in the light of the circumstances under which they are or were made, not misleading or has provided any other information to any Buyer, including information referred to in Section 2(d) , that, considered in the aggregate, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are or were made, not misleading.

(iv)      Except as set forth in Schedule 3(f)(iv) , the Company is not required to file and will not be required to file any agreement, note, lease, mortgage, deed or other instrument entered into prior to the date this representation is made and in effect on the date this representation is made and to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound that has not been previously filed as an exhibit (including by way of incorporation by reference) to its reports filed or made with the SEC under the 1934 Act.

(v)       The accounting firm that has expressed its opinion with respect to the consolidated financial statements included in the Company’s most recently filed annual report on Form 10-KSB (the “ Audit Opinion ”) is independent of the Company pursuant to the standards set forth in Rule 2-01 of Regulation S-X promulgated by the SEC and such firm was otherwise qualified to render the Audit Opinion under applicable Securities Laws. Each accounting firm that since such filing has conducted or will conduct a review or audit of any of the Company’s consolidated financial statements is independent of the Company pursuant to the standards set forth in Rule 2-01 of Regulation S-X promulgated by the SEC and is otherwise qualified to conduct such review or audit and render an audit opinion under applicable Securities Laws.

(vi)      There is no transaction, arrangement or other relationship between the Company and an unconsolidated or other off-balance-sheet entity that is required to be disclosed by the Company in its reports pursuant to the 1934 Act that has not been so disclosed in the SEC Documents at least five (5) Business Days prior to the date of this Agreement.

(vii)     Since December 31, 2007, there have been no internal or SEC inquiries or investigations (formal or informal) regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of any executive officer, board of directors or any committee thereof of the Company or any of its Subsidiaries.

(viii)    The Company is not a “shell company” (as defined in Rule 12b-2 under the 1934 Act).

g.          Sarbanes-Oxley Compliance; Internal Accounting Controls; Disclosure Controls and Procedures; Books and Records .

(i)        Except for as set forth in the SEC Documents, the Company and its Subsidiaries are in all material respects in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder (collectively, “ Sarbanes-Oxley ”).

(ii)       Since December 31, 2007, except as set forth on Schedule 3(g)(ii) , neither the Company nor any of its Subsidiaries nor any director or officer, of the Company or any of its Subsidiaries has received or otherwise had or obtained Knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or its internal accounting controls, including any complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices.

(iii)      No attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of Securities Laws, breach of fiduciary duty or similar violation by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents to their respective boards of directors or any committee thereof or pursuant to Section 307 of Sarbanes-Oxley.

(iv)      Except as set forth in the SEC Documents, the Company has, and has caused each of its Subsidiaries to, at all times keep books, records and accounts with respect to all of such Person’s business activities, in accordance with sound accounting practices and GAAP consistently applied. Except as set forth in the SEC Documents, The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorizations, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (C) access to assets or incurrence of liability is permitted only in accordance with management’s general or specific authorization and (D) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences.

(v)       The Company has timely filed and made publicly available on the SEC’s EDGAR system no less than five (5) Business Days prior to the date of this representation, all certifications and statements required by (A) Rule 13a-14 or Rule 15d-14 under the 1934 Act and (B) Section 906 of Sarbanes-Oxley with respect to any Company SEC Documents.

(vi)      Except as set forth in the SEC Documents, the Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the 1934 Act. Except as set forth in the SEC Documents, such disclosure controls and

procedures are effective to ensure that the information required to be disclosed by the Company in the reports that it files with or submits to the SEC (A) is recorded, processed, summarized and reported accurately within the time periods specified in the SEC’s rules and forms and (B) is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(vii)     Except as set forth in the SEC Documents, the Company maintains internal control over financial reporting required by Rule 13a-14 or Rule 15d-14 under the 1934 Act. As set forth in the SEC Documents, such internal control over financial reporting contains material weaknesses.

h.          Absence of Certain Changes . Since December 31, 2007, neither the Company nor any of its Subsidiaries has taken any steps, and neither the Company nor any of its Subsidiaries currently expects to take any steps, to seek protection pursuant to any bankruptcy law, nor does the Company or any of its Subsidiaries have any Knowledge or reason to believe that the creditors of such Person intend to initiate involuntary bankruptcy proceedings or any knowledge of any fact that would reasonably lead a creditor to do so. Neither the Company nor any of its Subsidiaries is as of the date this representation is made, nor after giving effect to the transactions contemplated hereby or by any of the other Transaction Documents will be, Insolvent. Except as set forth in the SEC Documents, since December 31, 2007, neither the Company nor any of its Subsidiaries has declared or paid any dividends or sold any assets outside of the ordinary course of business. Except as set forth in the SEC Documents, since December 31, 2006, neither the Company nor any of its Subsidiaries has had any capital expenditures outside the ordinary course of its business.

i.           Absence of Litigation . Except as set forth on Schedule 3(i) or as disclosed in the SEC Documents, (i) there has at no time been any action, suit, proceeding, inquiry or investigation (“ Litigation ”) before or by any court, public board, Governmental Entity, self-regulatory organization or body pending or, to the Company’s Knowledge, threatened against or affecting the Company or any of its Subsidiaries or any of their assets, and (ii) to the Company’s Knowledge, no director or officer of the Company or any of its Subsidiaries has been involved in securities-related Litigation during the past five (5) years. No Litigation disclosed in the SEC Documents or on Schedule 3(i) is material to the business, operations, results of operations, condition (financial or otherwise), or properties of the Company or any of its Subsidiaries in any respect.

j.           Full Disclosure; No Undisclosed Events, Liabilities, Developments or Circumstances . Since December 31, 2007 or as set forth in the SEC Documents, there has been no Material Adverse Effect and no circumstances exist that, individually or in the aggregate, could reasonably be expected to be, cause or have a Material Adverse Effect. Except (A) as and to the extent disclosed or reserved against on the Most Recent Balance Sheet, (B) as incurred since the date thereof in the ordinary course of business consistent with past practice, or (C) as set forth on Schedule 3(j) , neither the Company, nor any of its Subsidiaries has any material liabilities or obligations of any nature, whether fixed or unfixed, known or unknown, secured or unsecured, absolute, accrued, contingent or otherwise and whether due or to become due. No representation or warranty or other statement made by the Company in this Agreement or any of

the other Transaction Documents, the Schedules hereto or any certificate or instrument delivered pursuant to this Agreement contains any untrue statement or omits to state a material fact necessary to make any such statement, in light of the circumstances in which it was made, not misleading.

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

l.           No General Solicitation . Neither the Company nor any of its Affiliates, nor any Person acting on the behalf of any of the foregoing, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D), including advertisements, articles, notices, or other communications published in any newspaper, magazine or similar media or broadcast over radio, television or internet or any seminar or meeting whose attendees have been invited by general solicitation or general advertising, in connection with the offer or sale of the Shares.

m.         No Integrated Offering . Neither the Company nor any of its Affiliates, nor any Person acting on the behalf of any of the foregoing, has, directly or indirectly, made any offers or sales of any security or solicited any offers to purchase any security, under circumstances that would require registration of any of the Shares under the 1933 Act or cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the 1933 Act or any other regulatory or self-regulatory authority.

n.          Employee Relations . Except as set forth on Schedule 3(n) , neither the Company nor any of its Subsidiaries is involved in any labor union dispute nor, to the Knowledge of the Company, is any such dispute threatened. To the Knowledge of the Company, none of the employees of either the Company or any of its Subsidiaries is or has been a member of a union that relates, or following the Closing will relate, to such employee’s relationship with the Company, and neither the Company nor any of its Subsidiaries is or following the Closing will be, a party to a collective bargaining agreement. No executive officer (as defined in Rule 3b-7 under the 1934 Act), nor any other individual whose termination would be required to be disclosed on a Current Report on Form 8-K, has notified the Company that such individual intends to leave the Company or otherwise terminate such individual’s employment with the Company. The current employees of the Company and its Subsidiaries constitute all of the employees necessary to conduct the Company’s business as presently conducted and as proposed to be conducted (as described to Buyers prior to the date hereof). Except as set forth on Schedule  

3(n) , to the Knowledge of the Company, no such employee is, has been, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and the employment of each such individual does not, has not and will not subject the Company or any of its Subsidiaries to any material liability with respect to any of the foregoing matters. To the Company’s Knowledge, the Company and each of its Subsidiaries is in compliance in all material respects with all Laws relating to employment and employment practices, terms and conditions of employment and wages and hours. The Company and each of its Subsidiaries is in compliance in all material respects with all Laws relating to employee benefits and employee benefit plans (as such terms are defined in ERISA).

o.          Intellectual Property Rights . Except as set forth on Schedule 3(o) , the Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trademark applications and registrations, trade names, service marks, service mark registrations, service names, patents, patent rights, patent applications, copyrights (whether or not registered), inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (collectively, “ Intellectual Property ”) necessary to conduct their respective businesses as conducted as of the date this representation is made. Except as set forth in Schedule 3(o) , (i) none of the rights of the Company or any of its Subsidiaries in its Intellectual Property have expired or terminated, or are expected to expire or terminate within five (5) years from the date of this Agreement, (ii) there has been no infringement by the Company or any of its Subsidiaries or, to the Company’s Knowledge, any of the Company’s or any of its Subsidiaries’ licensors or licensees of any Intellectual Property rights of others, (iii) to the Company’s Knowledge, there has been no infringement by any third parties of any Intellectual Property owned or licensed by the Company or any of its Subsidiaries, or of any development of similar or identical trade secrets or technical information by others, (iv) there is no claim, action or proceeding pending or threatened in writing against, the Company, any of its Subsidiaries or, to the Company’s Knowledge, any of their respective licensors regarding their Intellectual Property or infringement of other Intellectual Property rights, and there is no claim, action or proceeding pending or threatened in writing against the Company, any of its Subsidiaries or, to the Company’s Knowledge, any of their respective licensors regarding their Intellectual Property or infringement of other Intellectual Property rights, (v) there are no facts or circumstances that could reasonably be expected to give rise to any of the foregoing, (vi) there is no patent or patent application which contains claims that interfere with the issued or pending claims of any of the Intellectual Property owned or licensed by the Company or any of its Subsidiaries, and (vii) none of the technology employed by the Company or any of its Subsidiaries has been obtained or is being used by the Company or any of its Subsidiaries in violation of any material contractual obligation binding on the Company or any of its Subsidiaries or is being used by any of the officers, directors or employees of the Company or of its Subsidiaries on behalf of the Company or any of its Subsidiaries in violation of the rights of any Person or Persons. The Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy, confidentiality and the value of all of their material Intellectual Property.

p.          Environmental Laws . Except as set forth on Schedule 3(p) , each of the Company and its Subsidiaries (i) has no Knowledge of any violation in any material respect of any Environmental Laws (as defined below), (ii) has no Knowledge of any current or prior liability for failure to comply with any Environmental Law, (iii) has received all permits, licenses

or other approvals required of it under applicable Environmental Laws to conduct its business as presently conducted, and (iv) is in compliance with all terms and conditions of any such permit, license or approval.

q.          Insurance . The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as is prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. All of the Company’s insurance policies are in full force and effect and are valid, outstanding and enforceable, and all premiums with respect thereto are currently paid and no basis exists for early termination of any of such insurance policies on the part of the insurer thereunder. None of Company or its Subsidiaries has failed to give any notice or present any claim under any such insurance policies in due and timely fashion, and there are no outstanding unpaid claims under any such insurance policies. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to result in a material increase in the Company’s current cost of such insurance.

r.          Regulatory Permits . The Company and its Subsidiaries possess all certificates, authorizations, approvals, licenses and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses (“ Permits ”) except to the extent that the failure to be in possession of any Permits, individually or in the aggregate, could not have, and could not be reasonably expected to have, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such Permit. The Company and its Subsidiaries are in compliance with the Permits in all material respects, and have no Knowledge that they