Sample Business Contracts


Placement Agent Agreement - Netgateway Inc. and Alpine Securities Corp.

Services Forms



                                 NETGATWAY, INC.

                            PLACEMENT AGENT AGREEMENT

                                                                   June 20, 2001
Alpine Securities Corporation
440 East 400 South
Salt Lake City, Utah  84111

Ladies and Gentlemen:

     The undersigned, Netgatway, Inc., a California corporation (the "Company"),
hereby  confirms  its  agreement  (the   "Agreement")   with  Alpine  Securities
Corporation (the "Placement Agent") as follows:

1.       Description of Shares.

         The  Company  proposes  to offer  for sale in a private  offering  (the
"Offering")  pursuant to Rule 506 of  Regulation  D  ("Regulation  D") under the
Securities  Act of 1933,  as amended  (the  "Securities  Act"),  a maximum  (the
"Maximum Amount") of $2,500,000, aggregate principal amount of its common stock,
$.001 par value (the "Common  Stock") of the  Company.  This  Offering  shall be
conducted  as set  forth  in  Section  4 hereof  and  shall  be made  solely  to
prospective  investors  ("Prospective  Investors")  which qualify as "Accredited
Investors" as defined in Rule 501 of Regulation D.

2.       Representations and Warranties of the Company.

         The Company  represents and warrants to, and agrees with, the Placement
Agent  as  follows:

     (a) The Company has  prepared  and has  delivered  to the  Placement  Agent
copies of Subscription  Materials,  dated May 31, 2001, relating to, among other
things,  the  Company,  the  Common  Stock and the terms of the  Offering.  Such
Subscription  Materials,  including  all  exhibits  thereto  and  all  documents
delivered  therewith  and  incorporated  by reference  therein,  are referred to
herein  as the  "Memorandum"  unless  such  Subscription  Material  or any  such
exhibits or documents  shall be  supplemented or amended in accordance with this
Agreement, in which event the term "Memorandum" shall refer to such Subscription
Material and such exhibits and documents as so  supplemented or amended from and
after  the  time of  delivery  to the  Placement  Agent  of such  supplement  or
amendment.

     (b) All offers and sales of the Common  Stock made in  accordance  with the
Memorandum  and this  Agreement  shall be  exempt  from  registration  under the
Securities Act of 1933, as amended.

     (c) During the period  commencing on the date hereof and terminating on the
later  of  the  last  Additional  Closing  (as  hereinafter   defined)  and  the
Termination  Date (as  hereinafter  defined),  neither the  Memorandum  (and any
amendment or supplement thereto), nor any other document provided to Prospective
Investors  pursuant to this Agreement,  shall contain any untrue  statement of a
material  fact or  omit  to  state  any  material  fact  necessary  to make  the
statements  made therein,  in light of the  circumstances  under which they were
made, not misleading and at any Closing (as  hereinafter  defined) no event will
have occurred  which should have been set forth in an amendment or supplement to
the  Memorandum or such other  document,  as the case may be, in order to comply
with this Section 2(a)(2) which has not then been set forth in such an amendment
or  supplement.  Copies of contracts to which the Company is a party provided by
the Company to Prospective  Investors shall be true, correct,  and complete copy
of such contract, as amended or modified through the date it is so provided.

     (d) The Company has not, directly or indirectly, offered to sell any shares
of Common Stock or any other  securities of the Company during the  twelve-month
period  ending on the date hereof,  which would be  integrated  with the sale of
Common  Stock in a manner that would  require the  registration  of the Offering
pursuant to the Securities Act and; has no present  intention to offer to buy or
sell any shares of Common  Stock or any other  securities  of the Company  other
than pursuant to this Agreement or pursuant to a registered  public  offering of
the Company's securities, which may be commenced following the completion of the
Offering  other than a possible  conversion  into Common Stock of an  additional
portion of the Debenture  dated as of July 31, 2000 and held by King William LLC
and the  satisfaction  of  certain  amounts  owed to certain  executives  of the
Company through the issuance of Common Stock.

     (e) The Company  and its  Subsidiaries  are  corporations  duly  organized,
validly  existing,  and in good  standing  under  the laws of  their  respective
jurisdiction of incorporation,  with full power and authority, and all necessary
consents, authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal,  state,  local, and
other  governmental  authorities  and all  courts and other  tribunals,  to own,
lease,  license, and use its respective properties and assets and to conduct its
respective  business in the manner described in the Memorandum.  The Company and
its Subsidiaries are duly qualified to do business as a foreign  corporation and
is in good  standing  as such in  every  jurisdiction  in which  its  ownership,
leasing,  licensing,  or use of  property  and assets or the  conduct  their its
respective business makes such qualification necessary, except where the failure
to so  qualify  will  not  have a  material  adverse  effect  on  the  business,
prospects,  financial condition, or results of operations of the Company and its
Subsidiaries  taken as a whole. The Company and its  Subsidiaries,  collectively
referred to herein as the Company.

     (f) As of the date  hereof,  the  authorized  capital  stock of the Company
consists of 250,000,000  shares of Common Stock, of which 21,694,791  shares are
outstanding,  and  5,000,000  shares of Preferred  Stock,  $.001 par value,  per
share,  of which  there are no shares  outstanding.  All  outstanding  shares of
capital stock of the Company is duly authorized and validly issued,  fully paid,
and  nonassessable,  have been issued in  compliance  with all federal and state
securities  laws,  and  were  not  issued  in  violation  of or  subject  to any
preemptive  or  similar  rights of  shareholder.  Except as set forth in Section
2(c), there is no commitment, plan, or arrangement to issue, and not outstanding
option,  warrant,  or other  right  calling  for the  issuance  of, any share of
capital  stock of the Company or any security or other  instrument  which by its
terms is convertible  into, or exercisable or exchangeable for, capital stock of
the  Company,  except  as  may  be  properly  in the  Memorandum.  There  are no
outstanding security or other instrument which by its terms is convertible into,
or exercisable or exchangeable for, capital stock of the Company,  except as may
be described in the Memorandum.

     (g) The audit  firms who have  examined  the  financial  statements  of the
Company,  together with the related  schedules and notes,  which are included in
the Memorandum, are independent accountants within the meaning of the Securities
Act and the rules and regulations  thereunder;  the audited financial statements
of the Company, together with the related schedules and notes, and the unaudited
financial  information,  forming  part of the  Memorandum,  fairly  present  the
financial  position  and  the  results  of  operations  of  the  Company  at the
respective  dates and for the  respective  periods to which they apply;  and all
audited financial statements of the Company, together with the related schedules
and notes,  and the  unaudited  financial  information,  have been  prepared  in
accordance with generally accepted accounting  principles  consistently  applied
throughout the periods involved except as may be otherwise  stated therein.  The
financial and  statistical  data included in the  Memorandum  present fairly the
information  shown therein and have been compiled on a basis consistent with the
audited financial statements presented therein.

     (h) There is no  pending  or  threatened  litigation,  arbitration,  claim,
action,  governmental or other proceeding (formal or informal), or investigation
with  respect to the Company,  or any of its  officers,  directors,  operations,
businesses,  properties,  or  assets,  except as is  properly  described  in the
Memorandum  or  such as  individually  or in the  aggregate  may  result  in any
material adverse effect upon the business,  prospects,  financial condition,  or
results of  operations  of the  Company.  To the best  knowledge of the Company,
neither the Company nor any  Subsidiary  is not in  violation  of, or in default
with respect to, any law, rule,  regulation,  order, judgment, or decree, except
as may be properly  described in the  Memorandum  or such as in the aggregate do
not now have, and may not in the future have, a material adverse effect upon the
business,  prospects,  financial  condition,  or  results of  operations  of the
Company  and the  Subsidiaries  taken  as a  whole;  nor is the  Company  or any
Subsidiary  currently  required  to take any  action  in order to avoid any such
violation or default.

     (i)  Except  as  disclosed  in the  Memorandum,  the  Company  has good and
marketable title to all properties and assets which the Memorandum indicates are
owned by it, free and clear of all liens, security interests,  pledges, charges,
encumbrances,  and mortgages, except as may be disclosed in the Memorandum or as
are not material to the Company and the  Subsidiaries  taken as a whole. No real
property owned, leased,  licensed,  or used by the Company lies in an area which
is, or to the  knowledge  of the  Company  will be,  subject to zoning,  use, or
building  code  restrictions  which would  prohibit or  prevent,  the  continued
effective  ownership,  leasing,  licensing,  or use of such real property in the
business of the Company as presently conducted.


     (j) Except as  disclosed in the  memorandum,  the Company owns or possesses
adequate licenses or other rights to use all patents, patent rights, inventions,
trade secretes, licenses, know-how, proprietary techniques,  including processes
and substances, trademarks, service marks, trade names, and copyrights disclosed
in the  M`emorandum  as owned or used by it or which are material to  conducting
its business  except for any  infringement,  singly or in the  aggregate,  which
could not  reasonably  be expected to have a material and adverse  affect on the
business,  prospects,  financial  condition  or  results  of  operations  of the
Company. All such patents, patent rights, licenses,  trademarks,  service marks,
and copyrights are (i) valid and  enforceable,  (ii) not being  infringed by any
third parties which infringement could,  singly or in the aggregate,  materially
and adversely affect the business, prospects,  financial condition or results of
operations  of the Company and (iii)  uncontested  by any third party except for
any  infringement,  singly or in the  aggregate,  which could not  reasonably be
expected  to have a material  and  adverse  affect on the  business,  prospects,
financial condition or results of operations of the Company.  The Company has no
knowledge  of, nor has it received any notice of,  infringement  of, or conflict
with,  asserted  rights of others with  respect to any patents,  patent  rights,
inventions, trade secrets, licenses, know-how, proprietary techniques, including
processes and substances,  trademarks, service marks, trade names, or copyrights
which,  singly or in the aggregate,  if the subject of an unfavorable  decision,
ruling,   or  finding  could  materially  and  adversely  affect  the  business,
prospects, financial condition, or results of operations of the Company.

     (k) The Company has all requisite power and authority to execute,  deliver,
and perform each of this Agreement,  any Subscription Agreements  ("Subscription
Agreements")  delivered  to the  Company  pursuant  to the  Memorandum,  and the
Agent's  Warrants  (as  hereinafter  defined)  (collectively,  the  "Transaction
Agreements")  and to  consummate  the  transactions  contemplated  thereby.  All
necessary corporate proceedings of the Company have been duly taken to authorize
the  execution,  delivery,  and  performance  by  the  Company  of  each  of the
Transaction Agreements.  This Agreement has been duly authorized,  executed, and
delivered by the  Company,  are legal,  valid,  and binding  obligations  of the
Company, and are enforceable as to the Company in accordance with its respective
terms, except as such  enforceability may be limited by bankruptcy,  insolvency,
or other laws  affecting  the rights of creditors  generally.  The  Subscription
Agreements,  and the Agent's  Warrants have been duly  authorized by the Company
and,  when  executed and  delivered by the Company,  will be legal,  valid,  and
binding  obligations  of the  Company,  each  enforceable  as to the  Company in
accordance  with its  respective  terms,  except as such  enforceability  may be
limited  by  bankruptcy,  insolvency,  or other  laws  affecting  the  rights of
creditors  generally.  No  consent,  authorization,  approval,  order,  license,
certificate,  or permit of or from, or  declaration or filing with, any federal,
state, local, or other governmental  authority or any court or other tribunal is
required by the Company  for the  execution,  delivery,  or  performance  by the
Company  of the  Transaction  Agreements,  except  (A) the filing of a Notice of
Sales of Securities on Form D pursuant to Regulation D under the  Securities Act
and (B) filings and  consents  under "blue sky" or state  securities  laws which
will be made and/or obtained in accordance with all applicable laws,  rules, and
regulations.  No consent of any party to any  contract,  agreement,  instrument,
lease,  license,  arrangement,  or  understanding  to which the  Company  or any
Subsidiary is a party, or to which any of their respective  properties or assets
are subject,  is required for the  execution,  delivery,  or  performance of the
Transaction  Agreements;  and the execution,  delivery,  and  performance of the
Transaction  Agreements will not violate,  result in a breach of, conflict with,
result in the creation or imposition of any lien,  charge,  or encumbrance  upon
any properties or assets of the Company or any Subsidiary  pursuant to the terms
of,  or,  with or without  the giving of notice or the  passage of time or both,
entitle  any party to  terminate  or call a default  under,  any such  contract,
agreement,   instrument,  lease,  license,  arrangement,  or  understanding,  or
violate,  result in a breach of, or  conflict  with any term of the  articles of
incorporation (or other charter document) or by-laws of the Company, or violate,
result in a breach of, or  conflict  with,  any law,  rule,  regulation,  order,
judgment,  or decree binding on the Company or any Subsidiary or to which any of
their respective operations, businesses, properties, or assets are subject.

     (l) The Representative's  Warrants have been duly and validly authorized by
the Company and upon  delivery to you in  accordance  with the  Representative's
Warrant Agreement will be duly issued and legal,  valid and binding  obligations
of the Company.

     (m) The shares of Common  Stock or upon  exercise of the  Agent's  Warrants
(the "Agent's  Warrant  Shares") are validly  authorized  and have been duly and
validly  reserved for issuance and, when issued and delivered  upon the exercise
of the Agent's  Warrants,  as applicable,  in accordance with the terms thereof,
will be validly  issued,  fully paid,  and  nonassessable,  without any personal
liability  attaching  to the  ownership  thereof,  and  will  not be  issued  in
violation of any preemptive or similar rights of shareholder; and the holders of
the Agent's  Warrants  will  receive good title to the Agent's  Warrant  Shares,
issued thereto upon the exercise of the Agent's Warrants,  free and clear of all
liens,  security  interests,  pledges,  charges,   encumbrances,   shareholder's
agreements and voting trusts.  The Common Stock, the Agent's  Warrants,  and the
Agent's Warrant Shares conform to all statements  relating thereto  contained in
the Memorandum.

     (n) Subsequent to the respective dates as of which  information is given in
the Memorandum,  and except as otherwise  disclosed herein or in the Memorandum,
the Company has not (A) issued any securities or incurred any material liability
or material obligation,  primary or contingent,  for borrowed money, (B) entered
into any  material  transaction  not in the  ordinary  course of  business,  (C)
declared or paid any  dividend  on its capital  stock,  or (D)  experienced  any
adverse changes or any  development  which may materially  adversely  effect the
business,   prospects,   condition  (financial  or  otherwise),  net  assets  or
shareholder's equity, key personnel, assets, or property of the Company.

     (o) The Company has been advised  concerning the Investment  Company Act of
1940, as amended (the  "Investment  Company Act"), and the rules and regulations
promulgated  thereunder.  The Company is not, and does not intend to conduct its
business  in a  manner  in  which  it  would be  required  to  register  as,  an
"investment company" as defined in the

     (p) Except as set forth in the Memorandum, the Company has not incurred any
liability  for a fee,  commission,  or  other  compensation  on  account  of the
employment  of  a  broker  or  finder  in  connection   with  the   transactions
contemplated by this Agreement.

     (q)  Except as  disclosed  in the  Memorandum,  the  Company  has filed all
necessary  federal,  state,  local, and foreign income and franchise tax returns
and other  reports  required  to be filed  and has paid all  taxes  shown as due
thereon;  and there is no tax deficiency which has been, or, to the knowledge of
the Company, might be, asserted against the Company.

     (r) The Company maintains  insurance with insurers of recognized  financial
responsibility of the types and in the amounts generally deemed adequate for its
business  including,  but not limited to,  insurance  covering real and personal
property owned or leased by the Company against theft, damage, destruction, acts
of  vandalism  and all other  risks  customarily  insured  against  all of which
insurance  is in full force and effect;  the  Company  has not been  refused any
insurance  coverage  sought or applied  for;  and the Company  does not have 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  materially  and  adversely   affect  the  condition   (financial  or
otherwise), earnings, operations, business or business prospects of the Company.

     (s) No labor  disturbance by the employees of the Company exists or, to the
best of the Company's  knowledge,  is imminent.  The Company is not aware of any
existing  or  imminent  labor  disturbance  by the  employees  of any  principal
suppliers or customers that might be expected to result in any material  adverse
change in the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company. No collective  bargaining agreement exists
with any of the Company's employees and, to the best of the Company's knowledge,
no such agreement is imminent.

     (t) Except as set forth in the Memorandum, (i) the Company is in compliance
in all material  respects with all rules,  laws and regulations  relating to the
use,  treatment,  storage and disposal of toxic  substances  and  protection  of
health or the  environment  ("Environmental  Laws") that are  applicable  to its
business,  (ii) the  Company  has  received  no  notice  from  any  governmental
authority or third party of an asserted claim under  Environmental  Laws,  which
claim  is  required  to be  disclosed  in the  Registration  Statement  and  the
Prospectus,  (iii)  to its best  knowledge,  the  Company  is not  likely  to be
required  to  make  future   material   capital   expenditures  to  comply  with
Environmental  Laws (iv) no property  which is owned,  leased or occupied by the
Company has been  designated as a Superfund  site pursuant to the  Comprehensive
Response,  Compensation,  and Liability  Act of 1980, as amended (42 U.S.C.  ss.
9601, et seq.), or otherwise  designated as a contaminated site under applicable
state or local law, and (v) to the best knowledge of the Company, the Company is
not  in  violation  of any  federal  or  state  law or  regulation  relating  to
occupational safety or health.

     (u)  The  Company  maintains  a  system  of  internal  accounting  controls
sufficient to provide  reasonable  assurances 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 generally  accepted  accounting  principles and to
maintain accountability for assets,  including without limitation cash receipts,
(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 existing assets at reasonable  intervals and appropriate action is
taken with respect to any differences.

     (v) There are no outstanding  loans,  advances  (except normal advances for
business  expenses  in  the  ordinary  course  of  business)  or  guarantees  of
indebtedness  by the  Company  to or for  the  benefit  of any of the  officers,
directors  or  director-nominees  of the  Company  or any of the  members of the
families of any of them,  except as disclosed in the Registration  Statement and
the Prospectus.

 3.  Representations  and  Warranties of the  Placement  Agent.

         The  Placement  Agent,  hereby  represents  and warrants to, and agrees
with,  the  Company as  follows:

     (a) The Placement  Agent will not deliver any  Subscription  Materials,  or
offer or sell any shares of Common  Stock to any  investor  which the  Placement
Agent did not have reasonable  grounds to believe,  and did not believe,  was an
"accredited  investor"  as  defined  in Rule  501(a)(3)  of  Regulation  D.  The
Placement  Agent  shall  use  its  reasonable   efforts  to  determine   whether
Prospective  Investors  are  "accredited  investors"  and that  all  information
provided by Company investors is true and accurate.

     (b) The  Placement  Agent will not offer or sell any shares of Common Stock
by means of any form of general solicitation or general advertising,  including,
without limitation, the following:

          (A)  any  advertisement,   article,  notice,  or  other  communication
published in any  newspaper,  magazine,  or similar  medium,  or broadcast  over
television or radio; and

          (B) any seminar or meeting  whose  attendees  have been invited by any
general solicitation or general advertising.

     (c) The  Placement  Agent  is a member  in good  standing  of the  National
Association of Securities Dealers, Inc. or a registered  representative  thereof
and is a broker-dealer  registered as such under the Securities  Exchange Act of
1934 (the "Exchange  Act") and under the securities  laws of the states in which
the Common Stock will be offered or sold by the Placement  Agreement,  unless an
exemption for such state  registration is available to the Placement  Agent. The
Placement  Agent  is in  compliance  with all  material  rules  and  regulations
applicable to it generally and applicable to its participation in the Offering.

     (d) The  Placement  Agent has  requisite  power and  authority  to execute,
deliver and perform this Agreement and consummate the transactions  contemplated
hereby.

     (e) This Agreement has been duly authorized, executed, and delivered by the
Placement Agent and is the legal, valid, and binding obligation to the Placement
Agent,  and is enforceable  against the Placement  Agent in accordance  with its
terms, except as such  enforceability may be limited by bankruptcy,  insolvency,
or other laws affecting the rights of creditors generally.

     (f) The Placement  Agreement  will not  intentionally  take any action that
reasonably  believes  would cause the  Offering to violate the  provision of the
Securities  Act,  the  Exchange  Act,  the  respective   rules  and  regulations
promulgated  there  under  or  applicable  "blue  sky"  laws  of  any  state  or
jurisdiction.

4.       Offering Structure; Appointment of Placement Agent; Closing.

     (a) On the basis of the  representations  and warranties  contained herein,
and subject to the terms and  conditions  set forth herein,  the Company  hereby
appoints the Placement Agent as its placement agent with respect to the Offering
and grants to the Placement Agent the right to offer,  as its agent,  the Common
Stock  pursuant  to  the  terms  of  this   Agreement.   On  the  basis  of  the
representations  and warranties  contained herein, and subject to the conditions
set forth herein, the Placement Agent hereby accepts such appointment and agrees
to use its best efforts to secure subscriptions for the Common Stock pursuant to
the terms of this  Agreement.  The  agency  relationship  created  hereby is not
terminable  by the  Company,  except upon  termination  of the  Offering or upon
expiration of the Offering  Period (as  hereinafter  defined) in accordance with
the terms of this Agreement.

     (b) The Common Stock shall be offered for sale to Prospective  Investors at
a purchase  price equal to $.50 per share.  The Placement  Agent has advised the
Company that it is its  intention to require  subscriptions  for at least 50,000
shares each;  provided,  however,  that the Company and the Placement  Agent may
accept  subscriptions  for less  than  such  number  of  shares  in  their  sole
discretion.

     (c) The Offering  shall  commence as of the date hereof and shall expire at
5:00 P.M.,  Pacific time, on August 31, 2001,  unless extended from time to time
for up to an  aggregate  of 45 days by mutual  agreement  of the Company and the
Placement Agent. Such period, as the same may be so extended or shortened, shall
hereinafter be referred to as the "Offering Period".

     (d) Each  Prospective  Investor  who desires to  purchase  shares of Common
Stock  shall  be  required  to  deliver  to the  Placement  Agent  one copy of a
subscription  agreement in the form annexed to the  Memorandum (a  "Subscription
Agreement"), including the applicable investor questionnaire, and payment in the
amount  necessary  to  purchase  the number of shares of Common  Stock that such
Prospective Investor desires to purchase. The Placement Agent shall not have any
obligation  to  independently   verify  the  accuracy  or  completeness  of  any
information  contained  in  any  Subscription  Agreement  or  the  authenticity,
sufficiency,  or validity of any check or other form of payment delivered by any
Prospective Investor in payment for the shares of Common Stock.

     (e) Pursuant to the  Subscription  Agreement,  dated as of the date hereof,
the Placement Agent has arranged for (i) the  establishment of an escrow account
with Loeb & Loeb, LLP,  entitled  "Netgatway,  Inc.,  Inc.--Trust  Account" (the
"Escrow  Account").  The Placement Agent shall deliver each check/wire  transfer
received  from a  Prospective  Investor  to the Escrow  Agent for deposit in the
Escrow Account and shall deliver the executed copy of the Subscription Agreement
received from such Prospective Investor to the Company. The Company shall notify
the Placement Agent promptly of the acceptance or rejection of any subscription.
The Company shall not unreasonably reject any subscription.

     (f) Subject to the  conditions  set forth in Section 6 hereof,  the initial
closing of the Offering (the "Initial  Closing"),  and  thereafter  from time to
time,  additional closings (each an "Additional  Closing," and together with the
Initial  Closing,  the "Closings")  shall be held at the offices of Loeb & Loeb,
LLP, 10100 Santa Monica Blvd. Suite 2200, Los Angeles, California 90067, at 9:00
A.M.,  Pacific  time,  on the fifth  business  day  following  the date that the
Placement   Agent  receives  oral  or  written  notice  from  the  Company  that
subscriptions have been so accepted or at such other place, time, and/or date as
the  Company and you shall agree  upon.  The  Company  shall  provide the notice
required by the  preceding  sentence as promptly as  practicable.  The date upon
which a Closing is held shall hereinafter be referred to as a "Closing Date."

          (ii) At a Closing,  the Company shall instruct the Escrow Agent to pay
to the  Placement  Agent,  from the funds  deposited  in the  Escrow  Account in
payment  for the  Common  Stock,  the  amounts  payable to the  Placement  Agent
pursuant to Section 5 of this  Agreement.  Promptly  after a Closing  Date,  the
Company  shall  deliver  to  the  purchasers  of  the  shares  of  Common  Stock
certificates  or  agreements  representing  such  securities  to which  they are
entitled.

5.       Fees and Expenses.

     (a) The Company shall pay in cash to The Placement  Agent a fee (the "Fee")
equal to 7% of the gross proceeds  received from the sale of the Common Stock to
investors  introduced  to the Company  directly or  indirectly  by the Placement
Agent (the "Company Investors").

     (b) In  addition  to the Fee  payable  to the  Placement  Agent  under this
Agreement,  the Company  shall  reimburse  the  Placement  Agent for  reasonable
documented out-of-pocket expenses incurred in connection with its services under
this Agreement if the Offering is not consummated, including the reasonable fees
and disbursements of the Placement Agent's legal counsel.

     (c) In  addition  to the Fee and the  Expenses,  at the Closing the Company
shall issue to the  Placement  Agent or its  designees  four-year  warrants (the
"Warrants")  to acquire  the shares of Common  Stock  equal to seven (7%) of the
number of Common Stock  purchased by the Company  Investors.  The Warrants shall
contain standard cashless  exercise  provisions as well as net issuance cashless
exercise provisions.  The Warrants shall have standard anti-dilution protection,
carry  registration  rights,  and be on such other terms and the Company and the
Placement Agent shall agree upon conditions as prior to the  commencement of the
Offering. The Warrants shall be issued at the Closings.

     (d) The Company acknowledges and agrees that it will be responsible for and
shall pay all other  costs  and  expenses  incident  to the  purchase,  sale and
delivery of Securities in the Offering,  including, without limitation, all fees
and  expenses of filing with the SEC,  the NASD;  if any,  all Blue Sky fees and
expenses;  fees and  disbursements  of counsel and  accountants for the Company;
printing costs; and the reasonable road show costs and expenses of the Placement
Agent and the road show costs and expenses of Company personnel.

6.       Covenants of the Company.

         The Company covenants that during the Offering Period it will:

     (a) Notify you  immediately,  and confirm such notice  promptly in writing,
when any event  shall have  occurred  during the period  commencing  on the date
hereof and ending on the expiration of the Offering  Period as a result of which
the Memorandum  would include any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made.

     (b) Not supplement or amend the Memorandum unless the Placement Agent shall
have approved of such supplement or amendment in writing. If, at any time during
the period  commencing  on the date hereof and ending on the  expiration  of the
Offering  Period,  any  event  shall  have  occurred  as a result  of which  the
Memorandum  contains any untrue  statement of a material  fact or omits to state
any  material  fact  required  to be stated  therein  or  necessary  to make the
statements therein not misleading, all in light of the circumstances under which
they were made,  or if, in the  opinion of counsel to the  Company or counsel to
the  Placement  Agent,  it is necessary at any time to  supplement  or amend the
Memorandum to comply with the Securities  Act,  Regulation D thereunder,  or any
applicable  state  securities  or "blue sky" laws,  the  Company  will  promptly
prepare an appropriate supplement or amendment, in form and substance reasonably
satisfactory  to the  Placement  Agent,  which will  correct  such  statement or
omission or which will effect such compliance.

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

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

     (e) Use its best efforts to qualify or register the Common  Stock,  and the
Agent's  Warrants  offered  hereby for offering and sale under,  or establish an
exemption from such qualification or registration under, the state securities or
"blue sky" laws of such  jurisdictions  as the  Placement  Agent may  reasonably
request.  The Company will not  consummate any sale of securities of the Company
in any  jurisdiction  or in any  manner in which  such sale may not be  lawfully
made.

     (f) At all times during the period commencing on the date hereof and ending
on the  expiration  of the  Offering  Period,  provide,  upon  request,  to each
Prospective Investor or his purchaser  representative,  if any, such information
(in addition to that contained in the Memorandum)  concerning the Offering,  the
Company,  or any other relevant  matters as it possesses or can acquire  without
unreasonable  effort or expense and extend to each Prospective  Investor or his,
her, or its purchaser  representative,  if any, the opportunity to ask questions
of, and receive answers from, the Company concerning the terms and conditions of
the Offering and the business of the Company and to obtain any other  additional
information,  to the  extent it  possesses  the same or can  acquire  it without
unreasonable  effort or  expense,  as such  Prospective  Investor  or  purchaser
representative may consider necessary in making an informed  investment decision
or in  order  to  verify  the  accuracy  of the  information  furnished  to such
Prospective  Investor  or  purchaser   representative,   as  the  case  may  be.
Notwithstanding anything contained in this Agreement to the contrary in no event
shall the  Company or any  Subsidiary  of the Company be required to disclose to
any  Prospective  Investor or Company  Investor any source code or other data or
information which the Company considers to be a trade secret or which is subject
to an obligation of confidentiality owned to a third party.

     (g) Before  accepting any  subscription to Common Stock from, or making any
sale to, any  Prospective  Investor,  have  reasonable  grounds  to believe  and
actually  believe  that (i) such  Prospective  Investor  meets  the  suitability
requirements  for  investing in the Common Stock offered by the  Memorandum  and
(ii) such Prospective Investor is an Accredited Investor.

     (h) Notify you promptly of the acceptance or rejection of any subscription.

     (i) File five (5) copies of a Notice of Sales of  Securities on Form D with
the Securities and Exchange  Commission (the "Commission") no later than 15 days
after the Closing Date and file a final notice on Form D with the  Commission no
later than 60 days after the Closing Date.  The Company shall file promptly such
amendments  to such Notices on Form D as shall become  necessary  and shall also
comply  with  any  filing  requirement  imposed  by the  laws  of any  state  or
jurisdiction  in which  offers and sales are made.  The  Company  shall  furnish
copies of all such filings to the  Placement  Agent and counsel to the Placement
Agent.

     (j) Place a legend substantially in the form of the following legend on all
certificates  representing  the Common Stock, the Agent's warrant shares and the
Agent's Warrants:

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

     (k) Not,  directly or  indirectly,  engage in any act or activity which may
jeopardize  the status of the  offering  and sale of the Common  Stock under the
state  securities or "blue sky" laws of any  jurisdiction  in which the Offering
may  be  made.   Without   limiting  the  generality  of  the   foregoing,   and
notwithstanding  anything  contained  herein to the contrary,  the Company shall
not, during the six (6) months following completion of the Offering, directly or
indirectly,  engage in any offering of securities  which, if integrated with the
Offering in the manner  prescribed by Rule 502(a) of Regulation D and applicable
releases of the  Commission,  may jeopardize the status of the Offering and sale
of the Common Stock as exempt transactions under Regulation D.

     (l) Apply the net  proceeds  from the  Offering  for the purposes set forth
under the caption "Use of  Proceeds"  in the  Memorandum  in  substantially  the
manner indicated thereunder.

(m) Not, during the period commencing on the date hereof and ending on the later
of the Closing Date and the expiration of the Offering  Period,  issue any press
release or other  communication or hold any press conference with respect to the
Company, its financial condition, results of operations,  business,  properties,
assets,  or liabilities,  or the Offering,  without the prior written consent of
the Placement  Agent.

     (n) Furnish to the  Placement  Agent as early as  practicable  prior to the
Closing, a copy of the latest available unaudited interim financial statement of
the  Company  which have been  renewed by the  Company's  independent  certified
public accountants.

     (o) Until exercise of the Agent's warrants,  reserve a sufficient amount of
shares of Common Stock for issuance upon such conversion.

     (p) Deliver to the Placement  Agent,  without  charge,  within a reasonable
period after the Closing Date,  two sets of bound volumes of the  Memorandum and
all related  materials to the  individuals  designated by the Placement Agent or
counsel to the Placement Agent.

     (q) Upon the request of the Placement  Agent, a list of the states in which
the Offering is being conducted.

7.       Covenants of the Placement Agent.

         The Placement Agent covenants that it will:

     (a) Not accept the  subscription  of any person unless  immediately  before
accepting  such  subscription  the  Placement  Agent has  reasonable  grounds to
believe and does  believe  that such person is an  Accredited  Investor  and the
Company has agreed that such subscription should be accepted.

     (b) Upon notice from the Company  that the  Memorandum  is to be amended or
supplemented  pursuant to Section 4(a)(2) hereof,  immediately  cease use of the
Memorandum  until receipt of such amendment or supplement  and  thereafter  will
make use of the Memorandum only as so amended or supplemented, and the Placement
Agent will deliver a copy of such  amendment or supplement  to each  Prospective
Investor to whom a copy of the  Memorandum  had  previously  been  delivered and
whose subscription had not been rejected.

8.       Payment of Expenses.

     (a) The  Company  hereby  agrees to pay all  fees,  charges,  and  expenses
incident to  including  without  limitation,  all fees,  charges,  and  expenses
incurred in connection with (i) the preparation, printing, reproduction, filing,
distribution,  and mailing of the Memorandum,  the Transaction Agreement and any
supplementals or amendments  thereto,  (ii) the issuance,  sale,  transfer,  and
delivery of the shares of Common  Stock,  including  any transfer or other taxes
payable  thereon  and the fees of any  transfer  agent or  registrar,  (iii) the
registration or  qualification  of the Common Stock, and the Agent's Warrants or
the  securing of an  exemption  therefrom  under "blue sky" or state  securities
laws. including, without limitation, filing fees payable in the jurisdictions in
which such  registration  or  qualification  or  exemption  therefrom is sought,
including the fees and  disbursements  of counsel in connection  with such "blue
sky"  matters;  (iv) the filing  fees,  if any,  payable to the  Securities  and
Exchange Commissions;  and (v) the retention of the Escrow Agent,  including the
fees and expenses of the Escrow Agent for serving as such.

9.       Conditions of Placement Agent's Obligations.

         The obligations of the Placement Agent pursuant to this Agreement shall
be subject, in the discretion of the Placement Agent, to the continuing accuracy
of the  representations  and warranties of the Company  contained  herein and in
each certificate and document  contemplated under this Agreement to be delivered
to the Placement Agent, as of the date hereof and as of the Closing Date, to the
performance by the Company of its  obligations  hereunder,  and to the following
conditions:

     (a) On or  prior  to the date of each  Closing,  as the  case  may be,  the
Placement  Agent shall have been  furnished  such  information,  documents,  and
certificates  as it may  reasonably  require  for the  purpose of enabling it to
review the  matters  referred  herein  and in order to  evidence  the  accuracy,
completeness,  or  satisfaction  of  any  of  the  representations,  warranties,
covenants,  agreements,  or conditions herein contained,  or as it may otherwise
reasonably request.

     (b) On or  prior  to the date of each  Closing,  as the  case  may be,  the
Placement  Agent  shall  have  been  furnished  such   information,   documents,
certificates,  and opinions as they may reasonably  require in order to evidence
the  accuracy,  completeness,  or  satisfaction  of any of the  representations,
warranties,  covenants,  agreements,  or conditions herein contained,  or as the
Placement Agent may reasonably request.

     (c) At the  date  of each  Closing,  (i)  neither  the  Memorandum  nor any
amendment or supplement thereto shall contain any untrue statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances  under which they were made, (ii) there shall have been, since the
respective dates as of which information is given in the Memorandum, no material
adverse change,  or any  development  involving a prospective  material  adverse
change,  in the business,  properties,  or condition  (financial or  otherwise),
results of operations,  capital stock,  long-term or short-term debt, or general
affairs of the Company  from that set forth in the  Memorandum,  except  changes
which the Memorandum  indicates might occur after the date thereof,  and neither
the Company  shall have  incurred any material  liabilities  or entered into any
agreements  not in the ordinary  course of business other than as referred to in
the Memorandum,  and (iii) except as set forth in the Memorandum, no litigation,
arbitration,  claim,  governmental or other proceeding (formal or informal),  or
investigation  shall  be  pending,  threatened,  or in  prospect  (or any  basis
therefor)  with  respect to the Company or any of their  respective  operations,
businesses,  properties,  or assets wherein an unfavorable decision,  ruling, or
finding would  materially  adversely  affect the business,  property,  condition
(financial  or  otherwise),  results of  operations,  or general  affairs of the
Company.

     (d) At the date of each Closing,  the Placement Agent shall have received a
certificate  of the chief  executive  officer and the chief  financial  officer,
dated the Closing  Date, to the effect,  among other things,  that (i) as of the
date of this Agreement and as of the date of such Closing,  the  representations
and warranties of the Company contained herein were and are accurate and correct
in all  material  respects,  and  (ii)  as of the  date  of  such  Closing,  the
obligations  to be performed  by the Company  hereunder on or prior to such time
have been fully performed.

     (e) Any  certificate or other document signed by any officer of the Company
and delivered to the Placement Agent or to counsel for the Placement Agent shall
be  deemed  a  representation  and  warranty  by the  Company  hereunder  to the
Placement  Agent as to the  statements  made  therein.  If any  condition to the
Placement  Agent's  obligations  hereunder to be  fulfilled  prior to or at each
Closing  Date,  is not so fulfilled,  the  Placement  Agent may  terminate  this
Agreement  or, if the  Placement  Agent so  elects,  in  writing  waive any such
conditions  which  have  not  been  fulfilled  or  extend  the  time  for  their
fulfillment.

10.      Indemnification and Contribution.

     (a)  Subject to the  conditions  set forth  below,  the  Company  agrees to
indemnify  and hold  harmless the  Placement  Agent,  its  officers,  directors,
partners,  employees, agents, and counsel, and each person, if any, who controls
the Placement  Agent within the meaning of Section 15 of the  Securities  Act or
Section 20(a) of the Exchange Act, against any and all loss,  liability,  claim,
damage,  and expense  whatsoever (which shall include,  for all purposes of this
Section  7, but not be  limited  to,  attorneys'  fees  and any and all  expense
whatsoever  incurred  in  investigating,  preparing,  or  defending  against any
litigation,  commenced or  threatened,  or any claim  whatsoever and any and all
amounts paid in  settlement  of any claim or  litigation)  as and when  incurred
arising out of, based upon, or in connection  with, (i) any untrue  statement or
alleged untrue  statement of a material fact contained in (A) the Memorandum (as
from time to time amended and  supplemented),  or any  amendment  or  supplement
thereto, or (B) any application or other document or communication (for purposes
of this Section 7, collectively referred to as an "application") executed by, or
on behalf of, the Company or based upon written information  furnished by, or on
behalf of, the Company filed in any  jurisdiction in order to qualify the Common
Stock,  and the Agent's Warrants under the "blue sky" or securities laws thereof
or filed with the  Commission;  unless such  statement  or omission  was made in
reliance  upon, and in conformity  with,  written  information  furnished to the
Company as stated in Section ___, (b) with respect to the Placement Agent by it,
or on its behalf, expressly for inclusion in the Memorandum, or any amendment or
supplement  thereto,  or in any  application,  as the case  may be;  or (ii) any
omission  or alleged  omission  to state a material  fact  required to be stated
therein or necessary to make the statements therein not misleading,  unless such
statement or omission was made in reliance upon, and in conformity with, written
information  furnished  to the Company as stated in Section 7(b) with respect to
the  Placement  Agent by it, or on its behalf,  expressly  for  inclusion in the
Memorandum,  or any amendment or supplement thereto,  or in any application,  as
the case may be, or (iii) any breach of any representation,  warranty, covenant,
or agreement of the Company contained in this Agreement. The foregoing agreement
to indemnify  shall be in addition to any  liability  the Company may  otherwise
have, including liabilities arising under this Agreement.

     If  any  action  is  brought  against  the  Placement  Agent  or any of its
respective officers, directors,  partners, employees, agents, or counsel, or any
controlling  persons of the Placement Agent (an "indemnified  party") in respect
of which  indemnity may be sought against the Company  pursuant to the foregoing
paragraph,  such indemnified  party or parties shall promptly notify the Company
in writing of the institution of such action (but the failure so to notify shall
not relieve the Company from any  liability  it may have other than  pursuant to
this Section  7(a)) and the Company  shall  promptly  assume the defense of such
action,  including,  without  limitation,  the employment of counsel  reasonably
satisfactory to such indemnified party or parties and payment of expenses.  Such
indemnified  party or  parties  shall  have the right to employ its or their own
counsel in any such case,  but the fees and expenses of such counsel shall be at
the expense of such  indemnified  party or parties unless the employment of such
counsel shall have been  authorized in writing by the Company in connection with
the  defense of such  action or the  Company  shall not have  promptly  employed
counsel  satisfactory to such indemnified party or parties to have charge of the
defense of such action or such indemnified party or parties shall have concluded
that there may be one or more legal defenses available to it or them or to other
indemnified parties which are different from, or in addition to, those available
to the Company,  in any of which events such fees and expenses shall be borne by
the Company,  and the Company  shall not have the right to direct the defense of
such  action on behalf of the  indemnified  party or  parties.  Anything in this
paragraph to the contrary  notwithstanding,  the Company shall not be liable for
any settlement of any such claim or action effected without its written consent,
which consent shall not be unreasonably withheld. The Company shall not, without
the prior  written  consent of each  indemnified  party that is not  released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment or otherwise  seek to terminate  any pending
or threatened  action,  in respect of which  indemnity  may be sought  hereunder
(whether  or  not  any  indemnified  party  is a  party  thereto),  unless  such
settlement,  compromise,  consent,  or  termination  includes  an  unconditional
release of each indemnified  party from all liability in respect of such action.
The Company agrees promptly to notify the Placement Agent of the commencement of
any  litigation  or  proceedings  against the Company or any of its  officers or
directors in connection with the sale of the Common Stock or the Memorandum,  or
any amendment or supplement thereto, or any application.

     (b) The Placement  Agent agrees to indemnify and hold harmless the Company,
each director,  officer,  partner,  employee, agent, and counsel of the Company,
and each other  person,  if any, who controls the Company  within the meaning of
Section 15 of the  Securities  Act or Section  20(a) of the Exchange Act, to the
same extent as the foregoing  indemnity from the Company to the Placement  Agent
in Section 7(a), but only with respect to (i)  statements or omissions,  if any,
made in the Memorandum (as from time to time amended and  supplemented),  or any
amendment or supplement thereto, or in any application, in reliance upon, and in
conformity with, written information  furnished to the Company as stated in this
Section  7(b) with  respect  to the  Placement  Agent by it,  or on its  behalf,
expressly  for  inclusion in the  Memorandum,  or any  amendment  or  supplement
thereto, or on any application,  as the case may be; provided, however, that the
obligation of the Placement  Agent to provide  indemnity under the provisions of
this Section 7(b) shall be limited to the amount which represents the commission
paid by the Company to the Placement  Agent in  connection  with the offering of
the Common Stock. For all purposes of this Agreement,  the name of the Placement
Agent  shall  constitute  the only  information  furnished  in writing by, or on
behalf of, the Placement  Agent  expressly for inclusion in the  Memorandum  (as
from time to time  amended or  supplemented),  or any  amendment  or  supplement
thereto,  or in any  application,  as the case may be, or (ii) any breach of any
representation,   warranty,  covenant,  or  agreement  of  the  Placement  Agent
contained in this Agreement.  If any action shall be brought against the Company
or any other person so indemnified based on the Memorandum,  or any amendment or
supplement thereto, or in any application, and in respect of which indemnity may
be sought  against the  Placement  Agent  pursuant  to this  Section  7(b),  the
Placement  Agent  shall have the rights and duties  given to the Company and the
Company and each other  person so  indemnified  shall have the rights and duties
given to the indemnified parties, by the provisions of Section 7(a).

     (c) To provide for just and equitable  contribution,  if (i) an indemnified
party  makes  a claim  for  indemnification  pursuant  to  Section  7(a) or 7(b)
(subject  to the  limitations  thereof),  but it is  found  in a final  judicial
determination,  not subject to further appeal, that such indemnification may not
be enforced in such case,  even though this  Agreement  expressly  provides  for
indemnification in such case or (ii) any indemnified or indemnifying party seeks
contribution under the Securities Act, the Exchange Act, or otherwise,  then the
Company  (including for this purpose any contribution  made by, or on behalf of,
any  director  or  officer of the  Company,  and any  controlling  person of the
Company),  as one entity,  and the Placement Agency  (including for this purpose
any contribution by, or on behalf of, an indemnified  party) as a second entity,
shall  contribute  to the losses,  liabilities,  claims,  damages,  and expenses
whatsoever  to which  any of them may be  subject,  in such  proportions  as are
appropriate  to reflect the relative  benefits  received by the Company,  or the
other hand, and the Placement Agent on the other hand; provided,  however,  that
if applicable law does not permit such allocation, then other relevant equitable
considerations such as the relative fault of the Company and the Placement Agent
in connection with the facts which resulted in such losses, liabilities, claims,
damages,  and expenses shall also be considered.  The relative benefits received
by the  Company,  on the one hand,  and the  Placement  Agent on the other hand,
shall be deemed to be in the same  proportion as (x) the total proceeds from the
Offering (net of commission payable to the Placement Agent pursuant to Section 3
hereof but before  deducting  expenses)  received  by the  Company,  and (y) the
commission  received by the Placement  Agent  pursuant to Section 3 hereof.  The
relative fault, in the case of an untrue  statement,  alleged untrue  statement,
omission,  or alleged  omission,  shall be  determined  by, among other  things,
whether such statement, alleged statement, omission, or alleged omission relates
to  information  supplied  by the  Company or by the  Placement  Agent,  and the
parties' relative intent, knowledge,  access to information,  and opportunity to
correct or prevent  such  statement,  alleged  statement,  omission,  or alleged
omission.  The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for  contribution  were  determined by pro rata or per capita  allocation of the
aggregate  losses,  liabilities,  claims,  damages,  and  expenses  (even if the
Placement Agent and the other indemnified parties were treated as one entity for
such  purpose) or by any other  method of  allocation  that does not reflect the
equitable considerations referred to in this Section 7(c). No person guilty of a
fraudulent  misrepresentation  (within  the  meaning  of  Section  11 (f) of the
Securities  Act) shall be  entitled to  contribution  from any person who is not
guilty of such fraudulent misrepresentation.  For purposes of this Section 7(c),
each person,  if any, who  controls  the  Placement  Agent within the meaning of
Section 15 of the  Securities  Act or Section 20(a) of the Exchange Act and each
officer, director,  partner, employee, agent, and counsel of the Placement Agent
shall  have the same  rights to  contribution  as the  Placement  Agent and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities  Act or  Section  20(a) of the  Exchange  Act and each  director  and
officer  of the  Company  shall  have the same  rights  to  contribution  as the
Company,  subject in each case to the provisions of this Section 7(c).  Anything
in this Section 7(c) to the contrary  notwithstanding,  no party shall be liable
for contribution  with respect to the settlement of any claim or action effected
without its written  consent.  This Section  7(c) is intended to  supersede  any
right to contribution under the Securities Act, the Exchange Act, or otherwise.

     11. Survival. All representations,  warranties,  covenants,  and agreements
contained in this Agreement shall be deemed to be  representations,  warranties,
covenants,  and  agreements  at the  Closing  Date,  and  such  representations,
warranties,  covenants,  and agreements of the Placement  Agent and the Company,
including  the  indemnity and  contribution  agreements  contained in Section 7,
shall  remain  operative  and  in  full  force  and  effect  regardless  of  any
investigation  made by, or on behalf of, the Placement  Agent or any indemnified
person,  or by, or on behalf of, the  Company,  or any person or entity which is
entitled to be indemnified under Section 7(b), and shall survive  termination of
this Agreement or the delivery of the Common Stock to the purchasers thereof. In
addition,  the provisions of Sections 5 through 12 shall survive  termination of
this  Agreement,  whether such  termination  occurs  before or after the Closing
Date.  Notwithstanding  anything in the Section 5(b) hereof to the contrary, and
in addition to the obligations  assumed by the Company  pursuant to Section 5(a)
hereof, if the offering should be terminated, the Company shall be liable to the
Placement Agent only for out-of-pocket  expenses incurred by the Placement Agent
in connection with this Agreement or the proposed,  offer, sale, and delivery of
the Common Stock.

     12.  Notices.  All  communications  hereunder,  except as may be  otherwise
specifically  provided herein, shall be in writing and, if sent to the Placement
Agent,  shall be mailed,  delivered,  or telexed or telegraphed and confirmed by
letter,  to Alpine Securities  Corporation,  440 East 400 South, Salt Lake City,
Utah 84111, or if sent to the Company, shall be mailed, delivered, or telexed or
telegraphed  and confirmed by letter,  to Netgatway,  Inc., 754 East  Technology
Avenue, Orem, Utah 84097, Attention:  Donald Dank, Chief Executive Officer, with
a copy to Behle & Latimer,  201 South Main Street, Salt Lake City, UT 84145. All
notices  hereunder  shall be effective  upon receipt by the party to which it is
addressed.

     13. Parties. This Agreement shall inure solely to the benefit of, and shall
be binding  upon,  the  Placement  Agent and the  Company  and the  persons  and
entities  referred  to in  Section  7 who are  entitled  to  indemnification  or
contribution,  and  their  respective  successors,  legal  representatives,  and
assigns (which shall not include any buyer,  as such, of the Common Stock and no
other person shall have, or be construed to have, any legal or equitable  right,
remedy,  or claim  under,  in respect of, or by virtue of this  Agreement or any
provision herein contained.

     14.  Assignment.  This Agreement  shall not be assigned by any party hereto
without the prior written consent of the other party hereto.

     15.  Construction.  This  Agreement  shall be governed by, and construed in
accordance  with,  the laws of the  State  of Utah,  without  giving  effect  to
conflict of laws.

     16.  Consent to  Jurisdiction.  The  Company  irrevocably  consents  to the
jurisdiction of the courts of the State of Utah and of any federal court located
in such State in  connection  with any action or  proceeding  arising out of, or
relating to, this Agreement,  any document or instrument  delivered pursuant to,
in connection with, or simultaneously  with this Agreement,  or a breach of this
Agreement or any such document or instrument.  In any such action or proceeding,
the Company waives personal service of any summons,  complaint, or other process
and agrees that service thereof may be made in accordance with Section 9 hereof.
Within 30 days after such  service or such other time as may be mutually  agreed
upon in writing by the attorneys  for the parties to such action or  proceeding,
the Company shall appear or answer such summons,  complaint,  or other  process.
Should the Company  fail to appear or answer  within such 30-day  period or such
extended period,  as the case may be, the Company shall be deemed in default and
judgment  may be entered  against  the Company for the amount as demanded in any
summons, complaint, or other process so served.

     17. Counterparts.  This Agreement may be executed in counterparts,  each of
which shall constitute an original and all of which, when taken together,  shall
constitute one agreement.

     If the  foregoing  correctly  sets  forth the  understandings  between  the
Placement Agent and the Company,  please so indicate in the space provided below
for that purpose,  whereupon  this letter shall  constitute a binding  agreement
between us.

                                    Regards,

                                    NETGATEWAY, INC.,

                                    By:
                                       --------------------------------------
                                    Name:
                                    Title:


Accepted as of the date first above

ALPINE SECURITIES CORPORATION

By:
   ---------------------------------
     Name:
     Title:




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