8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 15, 2008

Airbee Wireless, Inc.

__________________________________________

(Exact name of registrant as specified in its charter)

Delaware	000-50918	46-0500345
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
9400 Key West Avenue, Rockville, Maryland		20850
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 301-517-1860

Not Applicable

______________________________________________

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Richard P. Sommerfeld, our former CFO, filed an action against Airbee and others in the Circuit Court for Montgomery County, Maryland (the "Court") entitled Richard P. Sommerfeld, Jr. v. Airbee Wireless, Inc., Civil Case No. 265130-V, in which Airbee filed certain counterclaims against Sommerfeld (the "Action").

On June 8, 2007, the Court issued an Order that required Airbee to pay Sommerfeld $183,316.64 in accrued but unpaid salary, together with pre-judgment interest on the accrued unpaid salary, calculated from the date each payment was due until the date final judgment was entered in the case. On July 1, 2007, the parties entered into a Settlement Agreement (the "July 2007 Agreement") pursuant to which they resolved their differences without either party admitting any liability or wrongdoing. Subsequently, Airbee did not perform its obligations under the July 2007 Agreement, and accordingly, judgment was entered against Airbee on September 26, 2007 in the amount of $700,000, plus interest and costs of the Action, such that as of April 26, 2008, the amount owed on the judgment will be $740,833.33, plus costs, with interest continuing to accrue until the judgment is paid in full.

To date, Airbee has not paid any portion of the judgment entered against it and as of September 26, 2007, the value of the Court’s June 8, 2007 award to Sommerfeld had increased to $211,657.90 due to accretion of prejudgment interest.

As of February 29, 2008, Sommerfeld had incurred legal fees, court costs and other expenses in the amount of $148,737.21 in the Action and in enforcing his judgment, such that the total amount owed to Sommerfeld as of March 1, 2008 (excluding legal fees incurred after February 29, 2008) was $912,078.47.

On April 15, 2008, Airbee and Sommerfeld entered into a Settlement Agreement (the "Agreement")wherein Airbee agreed to pay Sommerfeld $350,000 which was allocated as salary, interest, legal fees and expenses. We also issued a Subordinated Secured Convertible Debenture to Sommerfeld in the amount of $465,000 at 12% interest and convertible at $0.05 per share. The debenture matures two years from the date of the Agreement. In addition, we issued to Sommerfeld 2,841,667 warrants to purchase our stock at various rates of $0.10, $0.20 and $0.30 per share.

Sommerfeld agreed to ask the Court to mark the judgment paid and satisfied, consent to file a joint motion to return the seized property to Airbee and enter into an Intercreditor Agreement with Airbee and Senior Creditors as described in the attached exhibit. A full and final release was granted between the parties.

Also, on April 15, 2008, the Company entered into a Note and Settlement Agreement ("Note") with Henry and Catherine Zimmer (the "Zimmers"), shareholders with whom the Company had previously entered into a "Bridge Note" in 2006 for $600,000. The Company has not been able to repay the loan. The Company currently has accrued interest and penalties amounting to over $1,250,000. Along with the Bridge Loan, the Company issued 3,200,000 shares of stock and 2,866,667 warrants to purchase stock at or above $0.40 per share.

The new Note replaces any and all prior Bridge Note documents, and has a face value of $700,000 at 8.5% simple interest payable monthly in cash or stock at discrete times at the option of the Company. The Zimmers shall have the option of converting up to $200,000 of the Note to stock at a conversion rate of $0.044 per share. The term of the Note is two years from the date of the Note. The Zimmers are to return the 3,200,000 shares issued under the old note to the Company and the Company agreed to reprice the outstanding warrants strike price from $0.40 to $0.17 per share. A full mutual release was granted for any and all actions prior to the date of this Note.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

See item 1.01 for detail describing the obligations.

Item 9.01 Financial Statements and Exhibits.

(A) Not Applicable.

(B) Not Applicable.

(C) Not Applicable.

(D) Exhibits.

Sommerfeld Settlement Agreement

Sommerfeld Subordinatd Convertible Debenture

Sommerfeld Warrant

Sommerfeld/Bartfam Intercreditor Agreement

Amendment No 2 to the Bartfam Debenture and Warrant Purchase Agreement

Zimmer Note and Settlement Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Airbee Wireless, Inc.
April 21, 2008	By:	E. Eugene Sharer
		Name: E. Eugene Sharer
		Title: President

Exhibit Index

Exhibit No.	Description
4.1	Sommerfeld Debenture
4.2	Sommerfeld Warrant
4.3	Sommerfeld - Bartfam Intercreditor Agreement
4.4	Amendment No 2 to Bartfam Debenture and Warrant Purchase Agreement
4.5	Zimmer Note and Settlement Agreement
10.1	Sommerfeld Settlement Agreement

EX-4.1

EXHIBIT A

FORM OF SUBORDINATED SECURED CONVERTIBLE DEBENTURE

THE SECURITIES REPRESENTED BY THIS SUBORDINATED SECURED CONVERTIBLE DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. ANY TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT AND AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY LAWS.

Airbee Wireless, Inc.

12% SUBORDINATED SECURED CONVERTIBLE DEBENTURE

$465,000 April 15, 2008

FOR VALUE RECEIVED, subject to the terms and conditions of this 12% Subordinated Secured Convertible Debenture (the “Debenture”), Airbee Wireless, Inc., a Delaware corporation with its principal offices located at9400 Key West Avenue, Rockville, Maryland 20850 (the “Company”), hereby promises to pay to the order of Richard P. Sommerfeld, Jr. (the “Holder”), the principal sum of

Four Hundred Sixty-five Thousand U.S. Dollars ($465,000.00) (the “Face Amount”), or such lesser amount as remains outstanding after any conversions pursuant to the terms set forth below, upon demand made by the Holder at any time on or after the date which is two (2) years from the date of this Debenture, in lawful money of the United States and in immediately available funds (the “Maturity Date”).

This Debenture is being issued pursuant to that certain Settlement Agreement of even date herewith (the “Settlement Agreement”) entered into by the Holder with the Company and this Debenture is subject to the Settlement Agreement, which together with this Debenture, sets forth the respective rights and obligations of the Holder and the Company with respect to this Debenture. Terms not defined herein shall have the meaning ascribed to them in the Settlement Agreement. If there is any conflict between the terms of the Settlement Agreement and this Debenture, the Settlement Agreement shall govern, subject in each case to the terms set forth in the Intercreditor Agreement (as defined below). Subject to the terms of the Intercreditor Agreement, if this Debenture is silent as to any term, the terms of the Settlement Agreement shall govern.

1. Interest. Subject to the terms and conditions of this Debenture, the Company also promises to pay to the Holder interest accrued on the outstanding unpaid principal amount hereof until such principal amount is paid at the rate of twelve percent (12%) per annum. Accrued but unpaid interest shall be paid in quarter-annual installments, commencing on the last day of the calendar quarter ending June 30, 2008, and on the last day of each calendar quarter thereafter, until this Note has been paid in full in accordance with the terms hereof. Interest may be paid, at the option of the Company, in cash or in shares of common stock of the Company, par value $0.00004 per share (“Common Stock”), at a price per share of Common Stock equal to 80% of the average of the volume weighted average price of the Common Stock for the preceding five (5) days on which the Common Stock is traded on the trading market on which the Common Stock is then listed or quoted for trading (for example, the OTC Bulletin Board, Pink Sheets published by Pink Sheets, LLC, the American Stock Exchange, or the Nasdaq National Market) as reported by a generally accepted reporting service such as Bloomberg PC.

2. Prepayment. The Debenture may be paid in whole or in part prior to the Maturity Date without premium or penalty upon notice by the Company to the lder, which prepayment notice shall be deemed effective as of the date of its issuance.

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3. Conversion.

(a) Conversion Mechanics. Upon any conversion of this Debenture pursuant to Section 3(b), this Debenture will convert into the number of shares of Common Stock obtaining by dividing (x) that portion of the Face Amount being converted, and all accrued and unpaid interest thereon as of the date of conversion, by (y) $0.05 (the “Conversion Price”). The Conversion Price shall be subject to adjustment as set forth in Section 4 below.

(b) Holder’s Option to Convert. The Holder shall have the right, but not the obligation, from time to time to convert all or any portion of the issued and outstanding Face Amount and accrued but unpaid interest thereon into fully paid and non-assessable shares of Common Stock at the Conversion Price.

(c) Mechanics of Holder’s Conversion. In the event that the Holder elects to convert all or any part of this Debenture into Common Stock, the Holder shall give notice of such election by delivering an executed and completed notice of conversion in substantially the form attached hereto as Exhibit I (the “Notice of Conversion”) to the Company on or before each Conversion Date (as defined below) and such Notice of Conversion shall provide a breakdown in reasonable detail of the Face Amount and accrued but unpaid interest thereon that are being converted. In addition, concurrently with providing the Notice of Conversion to the Company, and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the outstanding Face Amount and accrued and unpaid interest thereon as entered in its records and shall provide written notice of such adjustment to the Company. Each date on which a Notice of Conversion is delivered or telecopied to the Company in accordance with the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”). Pursuant to the terms of the Notice of Conversion, the Company will issue, within two (2) business days following a Conversion Date, instructions to the transfer agent, accompanied by an opinion of counsel, to issue to the Holder certificates representing the Conversion Shares (as hereinafter defined) and shall cause the transfer agent to transmit the certificates representing the Conversion Shares to the Holder within five (5) business days thereafter. In the case of the exercise of the conversion rights set forth herein, the conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Company of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of the Conversion Shares, unless the Holder provides the Company written instructions to the contrary.

(d) Reservation of Shares. During the period the conversion right exists, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Conversion Shares upon the conversion of all or any part of this Debenture (the “Conversion Shares”).

(e) No Fractional Shares. No fractional shares of Common Stock will be issued upon conversion of this Debenture. In lieu of any fractional shares to which the Holder would otherwise be entitled, the Company will pay the Holder in cash the amount of the unconverted Face Amount and accrued and unpaid interest, if any, which would otherwise be converted into such fractional shares.

(f) Release. Upon full conversion of this Debenture and payment of all cash amounts due to the Holder as provided in this Debenture, if any, the Company will forever be released from all of its payment obligations relating to the Face Amount of this Debenture and any accrued and unpaid interest thereon.

4. Conversion Price Adjustment. The Conversion Price shall be subject to adjustment from time to time as follows:

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time prior to the Maturity Date subdivide its Common Stock, by split-up or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend with respect to any shares of its Common Stock, then the Conversion Price in effect prior to such event shall be proportionately decreased or increased, as appropriate. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

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(b) Reclassification, Reorganization, Consolidation, Merger and Other Changes. In case of any reclassification, capital reorganization or change in the Common Stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a)), or consolidation or merger of the Company with or into another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of the Company’s Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for such Common Stock (a “Change”), then, as a condition of Change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the Maturity Date to receive upon conversion of this Debenture, the kind and amount of shares of stock and other securities and property receivable in connection with such Change that a holder of Common Stock would be entitled to receive in such Change. In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon conversion including adjustment of the Conversion Price.

5. Subordination of Obligations and Liens Under Intercreditor Agreement. The Obligations and all liens, security interests and other encumbrances of any nature (including judgment liens) granted to Holder hereunder or under the Settlement Agreement, or otherwise held at any time by Holder in and to the Pledged Property are subordinated in right and priority of payment to the Senior Debt (as defined in and provided for pursuant to that certain Intercreditor Agreement (the “Intercreditor Agreement”), dated as of April , 2008, by and among the Company, each Senior Creditor (as defined therein) party thereto, and the Holder). Notwithstanding any provision in the Settlement Agreement, this Subordinated Debenture or any other document to the contrary, all of Holder’s rights and remedies with respect to the Obligations or any other indebtedness owing by the Company to the Holder are subject in all respect to the terms of the Intercreditor Agreement. In the event of any conflict or inconsistency between the terms of the Settlement Agreement, the Debenture or any other agreement or law with respect to issues governed by the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control to the full extent permitted by applicable law.

6. Events of Default.

(a) An “Event of Default”, wherever used herein, means any one of the following events:

(i) Any default in the payment of the principal of, interest on or other charges in respect of this Debenture, free of any claim of subordination, as and when the same shall become due and payable (whether on a scheduled quarterly payment date, at maturity or by acceleration);

(ii) The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture or the Settlement Agreement, which is not cured with in the time prescribed;

(iii) The Company shall commence, or there shall be commenced against the Company under any applicable bankruptcy or insolvency laws, or the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or there is commenced against the Company any such bankruptcy, insolvency or other proceeding which remains un-dismissed for a period of 31 days; or the Company is adjudicated insolvent or bankrupt; or the Company makes a general assignment for the benefit of creditors; or the Company shall fail to pay its debts generally as they become due;

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(iv) The Common Stock shall cease to be quoted for trading or listed for trading on either the NASDAQ OTC Bulletin Board (“OTC”), NASDAQ SmallCap Market, New York Stock Exchange, American Stock Exchange or the NASDAQ National Market and shall not again be quoted or listed for trading thereon within ten (10) trading days of such delisting; or

    (v) The Senior Creditors (as defined in the Intercreditor Agreement) shall have issued a written notice to the Company asserting the existence or occurrence of an Event of Default under the Senior Debentures (as defined in the Intercreditor Agreement); provided, however, that immediately upon the Company’s delivery to the Holder of written evidence of the Senior Creditors’ recission, withdrawal, waiver, acknowledgment of the cure of, or agreement to forebear with respect to any such noticed Event of Default under the Senior Debenture, any Event of Default occurring or existing under this Debenture as the result of the operation of this clause (v) shall immediately and automatically, and without the need for any further notice to be given, any other document to be executed or other action to be taken by any Person, be deemed rescinded and cured for all purposes.

 (b) If either of the Chief Executive Officer or the Chief Financial Officer of the Company obtains actual knowledge (without any duty of diligence or investigation being implied) of the occurrence or existence of an Event of Default, the Company shall promptly provide the Holder with written notice thereof The Company’s failure to promptly provide written notice of any Event of Default under the circumstances described in the immediately preceding sentence shall constitute a separate Event of Default.

(c) During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder’s election, immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after an Event of Default at the Conversion Price then in-effect. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind.

7. General Matters.

(a) Governing Law. THIS DEBENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF NEW YORK STATE’S GENERAL OBLIGATIONS LAW.

(b) Submission to Jurisdiction. The Holder and the Company each hereby (i) submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York County for the purposes of all legal proceedings arising out of or relating to this Debenture; (ii) waives to, the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum; (iii) agrees that service of process in any such action or proceeding may be affected by mailing a copy thereof by registered or certified mail (or any substantially similar form and mail), postage prepaid, to the Holder or the Company at its respective address set forth below, or at such other address of which the Holder or the Company shall have been notified pursuant hereto; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction.

(b) Fees and Expenses. In the event that any suit or action is instituted to enforce any provision under this Debenture, the prevailing party in such dispute shall be entitled to recover from the losing party the reasonable fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Debenture, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, the reasonable fees, costs and expenses of appeals.

(c) Amendment or Waiver. Any term of this Debenture may be amended, and the observance of any term of this Debenture may be waived (either generally or in a particular instance and either retroactively or prospectively) only by the written consent of Holder.

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(d) Headings. The headings in this Debenture are for purposes of convenience of reference only, and shall not be deemed to constitute a part of this Debenture.

(e) Notices. All notices, requests, consents and other communications required or permitted hereunder shall be in writing (including telecopy or similar writing) and shall be sent to the address of the parties set forth below in this Section 7(e). Any notice, request, consent or other communication hereunder shall be deemed to have been given and received on the day on which it is delivered (by any means including personal delivery, overnight air courier, United States mail) or telecopied (or, if such day is not a business day or if the notice, request, consent or communication is not telecopied during business hours of the intended recipient, at the place of receipt, on the next following business day). Any of the parties hereto may, by notice given hereunder, designate any further or different address and/or number to which subsequent notices or other communications shall be sent. Unless and until such written notice is received, the addresses and numbers as provided herein shall be deemed to continue in effect for all purposes hereunder.

Addresses for Notices to Company:

Airbee Wireless, Inc.

9400 Key West Avenue

Rockville, Maryland 20850

Attention: Eugene Sharer, President

Facsimile: (301) 517-1861

With a copy to:

Stradling Yocca Carlson & Rauth

660 Newport Center Drive

Suite 1600

Newport Beach, California 92660

Attention: Shivbir S. Grewal, Esq.

Facsimile: (949) 725-4100

Address for Notices to Holder:

Richard P. Sommerfeld, Jr.

115 S. Oak Street

Falls Church, Virginia 22046

with a copy to:

Savit & Szymkowicz, LLP

7315 Wisconsin Avenue

North Tower — Suite 601

Bethesda, Maryland 20814

Attention: Diana M. Savit, Esq.

Telephone: (301) 951-9191

Facsimile: (301) 718-7788

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(f) Usury Limitation. In no event shall the amount paid or agreed to be paid to the Holder for the use or forbearance of money to be advanced hereunder exceed the highest lawful rate permissible under the then applicable usury laws. If it is hereafter determined by a court of competent jurisdiction that the interest payable hereunder is in excess of the amount which the Holder may legally collect under the then applicable usury laws, such amount which would be excessive interest shall be applied to the payment of the unpaid principal balance due hereunder and not to the payment of interest or, if all principal shall previously have been paid, promptly repaid by the Holder to the Company.

(g) Severability. Every provision of this Debenture is intended to be severable. If any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid, such illegal or invalid term or provision shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable.

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IN WITNESS WHEREOF, the Company has caused this Debenture to be executed as of the day and year first above written.

AIRBEE WIRELESS, INC., a Delaware corporation
By:	/s/ E. Eugene Sharer
	Name: E. Eugene Sharer
	Title: President

ACKNOWLEDGED AND AGREED:

HOLDER:

/s/ Richard P. Sommerfeld, Jr

Richard P. Sommerfeld, Jr.

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EXHIBIT I

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert all or part of the 12% Subordinated Secured Convertible Debenture)

Airbee Wireless, Inc.

9400 Key West Avenue

Rockville, Maryland 20850

Attention: E. Eugene Sharer, President

The undersigned hereby converts $ of the Face Amount and accrued and unpaid interest due and payable on April , 2010 under that certain 12% Subordinated Secured Convertible Debenture dated as of April , 2008 (the “Debenture”), into the number of shares of Common Stock of the Company set forth below (“Shares”) on and subject to the conditions set forth in the Debenture.

Date of Conversion	—
Shares to be Delivered	—
HOLDER

Richard P. Sommerfeld, Jr.

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EX-4.2

EXHIBIT B

FORM OF WARRANT

AIRBEE WIRELESS, INC.

WARRANT TO PURCHASE COMMON STOCK

WC-2008-

THE OFFER AND SALE OF THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”) OR QUALIFIED UNDER STATE SECURITIES LAWS AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND EFFECTIVE QUALIFICATION THEREOF OR IF SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND THE QUALIFICATION REQUIREMENTS OF THE RELEVANT STATE.

This certifies that, for good and valuable consideration, receipt of which is hereby acknowledged, Richard P. Sommerfeld (the “Holder”), and/or its assigns, is entitled to purchase, from time to time and subject to the terms and conditions of this Warrant, from AIRBEE WIRELESS, INC., a Delaware corporation (the “Company”), fully paid and non-assessable shares of Common Stock of the Company, par value $0.00004 per share (each, a “Share” and collectively, the “Shares”), in accordance with the terms hereof, during the period commencing on the date set forth on the signature page hereof (the “Commencement Date”). Terms not defined herein shall have the meaning ascribed to them in the Settlement Agreement being executed contemporaneously herewith (the “Settlement Agreement”). If there is any conflict between the terms of the Settlement Agreement and this Warrant, the Settlement Agreement shall govern. If this Warrant is silent as to any term, the terms of the Settlement Agreement shall govern.

1. Number of Shares; Vesting; Exercise Price and Expiration Date.

(a) This Warrant may be exercised for 2,841,667 Shares.

(b) The right to exercise this Warrant shall fully vest on the Commencement Date.

(c) The exercise or purchase price for the Shares shall be 1,550,000 warrants @ $0.10 per share, 775,000 warrants @ $0.20 per share and 516,667 warrants @ $0.30 per share. Such price shall be subject to adjustment pursuant to the terms hereof (such price, as adjusted from time to time, is hereinafter referred to as the “Exercise Price”).

(d) The purchase right represented by this Warrant shall terminate on or before 5 p.m. Pacific standard time, on the fifth (5th) anniversary of the Commencement Date (the “Expiration Date”).

2. Exercise and Payment.

(a) Cash Exercise. At any time after the Commencement Date, this Warrant may be exercised in whole or in part, from time to time, by the Holder by surrender of this Warrant and the Notice of Exercise annexed hereto duly (the “Notice of Exercise”) completed and executed by the Holder to the Company at the principal executive offices of the Company, together with payment in the amount obtained by multiplying the Exercise Price then in effect by the number of Shares thereby purchased, as designated in the Notice of Exercise. Payment may be in cash or by check payable to the order of the Company.

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(b) Net Issuance Exercise. If the Fair Market Value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), then in lieu of the payment methods set forth in Section 2(a) hereof, this Warrant may be exercised in whole or in part, by the Holder by electing to exchange all or some of this Warrant for Warrant Shares equal to the value of the amount of the Warrant being exchanged on the date of exchange. If the Holder elects to exchange this Warrant as provided in this Section 2(b), Holder shall surrender this Warrant and the Notice of Exercise completed and executed by the Holder to the Company at the principal executive offices of the Company, and the Company shall issue to the Holder the number of Warrant Shares computed using the following formula:

X =	(A*B)-(A*C)
	B
X =		The number of Warrant Shares to be issued to the Holder.
A =		The total number of Warrant Shares with respect to which this Warrant is then being exercised.
B =		The Fair Market Value of one Warrant Share on the date of exercise of this Warrant.
C =		The Exercise Price then in effect on the date of exercise of this Warrant.

For purposes of this Section 2(b), “Fair Market Value” shall be determined on a per Share basis as of the close of the business day preceding the date of exercise, which determination shall be made as follows: (a) if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange or quoted on any automated quotation service operated by The Nasdaq Stock Market, Inc., the Fair Market Value shall be the last reported sale price of that security on such exchange or system on the day for which the current market price is to be determined or, if no such sale is made on such day, the average of the highest closing bid and lowest asked price for such day on such exchange or system; (b) if the Common Stock is not so listed or quoted or admitted to unlisted trading privileges, the Fair Market Value shall be the average of the last reported highest bid and lowest asked prices quoted on the Nasdaq Electronic Bulletin Board, or, if not so quoted, then by the National Quotation Bureau, Inc. on the last business day prior to the day for which the Fair Market Value is to be determined; or (c) if the Common Stock is not so listed or quoted or admitted to unlisted trading privileges and bid and asked prices are not reported, the Fair Market Value shall be determined by the Company’s Board of Directors in its reasonable, good faith judgment.

(c) Mandatory Exercise. Promptly following the first consecutive ten (10) trading day period of time prior to the Expiration Date during which the closing sale price of the Company’s Common Stock, as reported by the Nasdaq National Market or other securities exchange on which the Company’s Common Stock is then listed, is equal to or greater than 300% of the Exercise Price on each day during such period, the Company shall deliver to the Holder a Mandatory Exercise Notice, together with a computation demonstrating the basis for such Mandatory Exercise Notice. In such event, notwithstanding anything to the contrary in Section 2(a) or Section 2(b) above, the Holder agrees to exercise this Warrant in full within ten (10) days following receipt of the Mandatory Exercise Notice from the Company. To the extent that this Warrant is not so exercised, it shall expire and be of no further force or effect. For purposes of this Warrant, “Mandatory Exercise Notice” shall mean the notice delivered by the Company to the Holder advising the Holder that the closing sale price of the Company’s Common Stock, as reported by the Nasdaq National Market or other securities exchange on which the Company’s Common Stock is then listed, has been equal to or greater than 300% of the Exercise Price (as adjusted for splits, reverse splits, stock dividends, share combinations and the like) for ten (10) consecutive trading days.

3. Delivery of Certificates. Within a reasonable time after exercise, in whole or in part, of this Warrant, the Company shall issue in the name of and deliver to the Holder, a certificate or certificates for the number of fully paid and nonassessable Shares which the Holder shall have requested in the Notice of Exercise. If this Warrant is exercised in part, the Company shall deliver to the Holder a new Warrant for the unexercised portion of this Warrant at the time of delivery of such certificate or certificates.

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4. No Fractional Shares. No fractional Shares or scrip representing fractional Shares will be issued upon exercise of this Warrant. If upon any exercise of this Warrant a fraction of a Share results, the Company will pay the Holder the difference between the cash value of the fractional Share and the portion of the Exercise Price allocable to the fractional Share.

5. Charges, Taxes and Expenses. The Holder shall pay all transfer taxes or other incidental charges, if any, in connection with the transfer of the Shares purchased pursuant to the exercise hereof from the Company to the Holder.

6. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

7. Saturdays, Sundays, Holidays, Etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding weekday which is not a legal holiday.

8 Adjustment of Exercise Price and Number of Shares. The number of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

(a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time after the date hereof but prior to the expiration of this Warrant subdivide its outstanding securities as to which purchase rights under this Warrant exist, by split-up or otherwise, or combine its outstanding securities as to which purchase rights under this Warrant exist, the number of Shares as to which this Warrant is exercisable as of the date of such subdivision, split-up or combination shall forthwith be proportionately increased in the case of a subdivision, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the purchase price payable per Share, so that the aggregate purchase price payable for the total number of Shares purchasable under this Warrant as of such date shall remain the same.

(b) Share Distribution. If at any time after the date hereof the Company makes a distribution on the Shares into which this Warrant is exercisable payable in Shares or other securities or rights convertible into Shares (“Share Equivalents”) without payment of any consideration by such holder for the additional Shares or the Share Equivalents (including the additional Shares issuable upon exercise or conversion thereof), then the number of Shares for which this Warrant may be exercised shall be increased as of the record date (or if no record date is set) for determining which holders of Shares shall be entitled to receive such distribution, in proportion to the increase in the number of outstanding Shares (and Shares issuable upon conversion of all such securities convertible into Shares) of as a result of such distribution, and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all the Shares issuable hereunder immediately after the record date (or on the date of such distribution, if applicable), for such distribution shall equal the aggregate amount so payable immediately before such record date (or on the date of such distribution, if applicable).

(c) Other Distributions. If at any time after the date hereof the Company distributes to holders of the class of Shares into which this Warrant is exercised, other than as part of its dissolution or liquidation or the winding up of its affairs, any Shares, any evidence of indebtedness or any of its assets (other than cash, Shares or securities convertible into Shares), then the Company may, at its option, either (i) decrease the per Share Exercise Price of this Warrant by an appropriate amount based upon the value distributed on each Share as determined in good faith by the Company’s Board of Directors or (ii) provide by resolution of the Company’s Board of Directors that on exercise of this Warrant, the Holder hereof shall thereafter be entitled to receive, in addition to the Shares otherwise receivable on exercise hereof, the number of Shares or other securities or property which would have been received had this Warrant at the time been exercised.

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(d) Reclassification, Etc. If at any time after the date hereof there shall be a change or reclassification of the securities as to which purchase rights under this Warrant exist into the same or a different number or type of securities of any other class or classes, then the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of Shares or other securities or property resulting from such change or reclassification, which would have been received by Holder for the Shares subject to this Warrant had this Warrant at such time been exercised.

9. Notice of Adjustments. Whenever the Exercise Price or number of Shares purchasable hereunder shall be adjusted pursuant to Section 8 hereof, the Company shall execute and deliver to the Holder a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and number of Shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first class mail, postage prepaid) to the Holder.

10. Rights as Shareholder. Prior to exercise of this Warrant, the Holder shall not be entitled to any rights as a shareholder of the Company with respect to the Shares, including (without limitation) the right to vote such Shares, receive distributions thereon, or be notified of shareholder meetings, and the Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company.

11. Restricted Securities. The Holder understands that this Warrant and the Shares purchasable hereunder constitute “restricted securities” under the federal securities laws inasmuch as they are, or will be, acquired from the Company in transactions not involving a public offering and accordingly may not, under such laws and applicable regulations, be resold or transferred without registration under the Securities Act of 1933, as amended (the “1933 Act”), or an applicable exemption from such registration. In this connection, the Holder acknowledges that the securities legend on Exhibit 1 to the Notice of Exercise attached hereto shall be placed on any Shares issued to the Holder upon exercise of this Warrant.

12. Certification of Investment Purpose. Unless a current registration statement under the 1933 Act shall be in effect with respect to the securities to be issued upon exercise of this Warrant, the Holder covenants and agrees that, at the time of exercise hereof, it will deliver to the Company a written certification executed by the Holder that the securities acquired by such Holder upon exercise hereof are for the account of such Holder and acquired for investment purposes only and that such securities are not acquired with a view to, or for sale in connection with, any distribution thereof.

13. Transferability. This Warrant shall be transferable on the books of the Company maintained at its principal office wherever then located, upon delivery thereof duly endorsed by the Holder or its assign(s), or their duly authorized attorney or representative, accompanied by proper evidence of succession, assignment or authority to transfer. Upon any registration of transfer, the Company shall execute and deliver new Warrants to the person entitled thereto. This Warrant may be transferred, divided or combined, upon request to the Company by the Holder, into a certificate or certificates representing the right to purchase the same aggregate number of Shares.

14. Miscellaneous.

(a) Construction. Unless the context indicates otherwise, the term “Holder” shall include any transferee or transferees of this Warrant pursuant to Section 13 and the term “Warrant” shall include any and all warrants outstanding pursuant to this Agreement, including those evidenced by a certificate or certificates issued upon division, exchange, substitution or transfer pursuant to Section 13.

(b) Restrictions. By receipt of this Warrant, the Holder makes the same representations with respect to the acquisition of this Warrant as the Holder is required to make upon the exercise of this Warrant and acquisition of the Shares purchasable hereunder as set forth in the Form of Investment Letter attached as Exhibit 1 to the Notice of Exercise attached hereto.

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(c) Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or three (3) days following deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified (or one (1) day following timely deposit with a reputable overnight courier with next day delivery instructions), or upon confirmation of receipt by the sender of any notice by facsimile transmission, at the address indicated below or at such other address as such party may designate by ten (10) days’ advance written notice to the other parties.

To Holder: Richard P. Sommerfeld, Jr.

115 S. Oak Street

Falls Church, Virginia 22046

with a copy to:

Savit & Szymkowicz, LLP

7315 Wisconsin Avenue

North Tower — Suite 601

Bethesda, Maryland 20814

Attention: Diana M. Savit, Esq.

To the Company:	Telephone: (301) 951-9191 Facsimile: (301) 718-7788 AIRBEE WIRELESS, Inc. 9400 Key West Avenue Rockville, Maryland 20850 Attention: Eugene Sharer, President Facsimile: (301) 517-1861
	With a copy to:
	Stradling Yocca Carlson & Rauth 660 Newport Center Drive Newport Beach, California 92660 Attention: Shivbir S. Grewal, Esq. Facsmile: (949) 725-4100

(d) Governing Law; Venue. Any dispute in the meaning, effect or validity of this Warrant shall be resolved in accordance with the laws of the State of New York without regard to the conflict of laws provisions thereof.

(e) Attorneys’ Fees. In the event that any suit or action is instituted under or in relation to this Warrant, including without limitation to enforce any provision in this Warrant, the prevailing party in such dispute shall be entitled to recover from the losing party reasonable fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Warrant, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, reasonable fees, costs and expenses of appeals.

(f) Entire Agreement. This Warrant, the exhibit, and the Settlement Agreement to which it is attached, constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings, whether oral or written, between the parties hereto with respect to the subject matter set froth below.

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(g) Binding Effect. This Warrant and the various rights and obligations arising hereunder shall inure to the benefit of and be binding upon the Company and its successors and assigns, and Holder and its successors and assigns.

(h) Waiver; Consent. This Warrant may not be changed, amended, terminated, augmented, rescinded or discharged (other than by performance), in whole or in part, except by a writing executed by the parties hereto, and no waiver of any of the provisions or conditions of this Warrant or any of the rights of a party hereto shall be effective or binding unless such waiver shall be in writing and signed by the party claimed to have given or consented thereto.

(i) Severability. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and the balance shall be enforceable in accordance with its terms.

(j) Assignment. Holder shall have the right, without the prior written consent of the Company, to (i) sell, assign, mortgage, pledge or otherwise transfer any interest or right created hereby, or (ii) delegate its duties or obligations under this Agreement. This Agreement is made solely for the benefit of the parties hereto, and no other person, partnership, association or corporation shall acquire or have any right under or by virtue of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Warrant effective as of the date set forth below.

	“Company” AIRBEE WIRELESS, INC.
DATED: April 15, 2008	By:	/s/ E. Eugene Sharer
		Name: E. Eugene Sharer
		Title: President

“Holder” RICHARD P. SOMMERFELD, JR.
By:	/s/ Richard P. Sommerfeld, Jr.
	Name: Richard P. Sommerfeld, Jr.

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NOTICE OF EXERCISE

To: AIRBEE WIRELESS, INC.

The undersigned hereby elects to purchase Shares (the “Shares”) of AIRBEE WIRELESS, INC., a Delaware corporation (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price pursuant to the terms of the Warrant.

Attached as Exhibit 1 is an investment representation letter addressed to the Company and executed by the undersigned as required by Section 12 of the Warrant.

Please issue certificates representing the Shares purchased hereunder in the names and in the denominations indicated on Exhibit 1 attached hereto.

Please issue a new Warrant for the unexercised portion of the attached Warrant, if any, in the name of the undersigned.

Dated:

Name:

Title:

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Exhibit 1

To: AIRBEE WIRELESS, INC.

In connection with the purchase by the undersigned of Shares of (the “Shares”) of AIRBEE WIRELESS, INC., a Delaware corporation (the “Company”), upon exercise of that certain Warrant dated as of April , 2008, the undersigned hereby represents and warrants as follows:

The Shares to be received by the undersigned upon exercise of the Warrant are being acquired for its own account, not as a nominee or agent, and not with a view to resale or distribution of any part thereof, and the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the same. The undersigned believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares.

The undersigned understands that the Shares are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in transactions not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the “Act”), only in certain limited circumstances. In this connection, the undersigned represents that it is familiar with Rule 144 of the Act, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

The undersigned understands the instruments evidencing the Shares may bear the following legend:

THE OFFER AND SALE OF THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”) OR QUALIFIED UNDER STATE SECURITIES LAWS AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR, THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND THE QUALIFICATION REQUIREMENTS OF THE RELEVANT STATE.

Dated:

Name:

Title:

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EX-4.3

INTERCREDITOR AND SUBORDINATION AGREEMENT

THIS INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Agreement”), dated as of April 15, 2008, is made by and among Airbee Wireless, Inc., a Delaware corporation (“Airbee” or the “Company”), each of the parties signing this Agreement under the title “Senior Creditors” on the signature pages hereto (together with each of their heirs, successors and assigns, each a “Senior Creditor”, and collectively, the “Senior Creditors”), and Richard P. Sommerfeld, Jr. (the “Subordinated Creditor”), and is made with reference to the following:

A. Pursuant to (1) that certain Assignment Agreement dated as of January 30, 2008 (as amended, modified, renewed, extended or replaced from time to time, the “Assignment Agreement”) by and between the Company, BARTFAM, a California Limited Partnership and one of the Senior Creditors (“Bartfam”), and YA Global Investment, L.P. (f/k/a Montgomery Equity Partners, L.P.), a Cayman Islands exempted limited partnership, Bartfam purchased, among other securities, a secured convertible debenture in the amount of One Hundred Fifty Thousand Dollars ($150,000) (the “Montgomery Debenture”) dated April 5, 2007 which is convertible into shares of the Company’s common stock and which, following certain conversions into common stock, has an outstanding principal balance of $53,300; which indebtedness is secured by perfected liens and security interests on all of the Company’s assets that were concurrently assigned to Bartfam pursuant to the Assignment Agreement; and (2) that certain Debenture and Warrant Purchase Agreement (the “Senior Creditor D&W Purchase Agreement”) dated as of January 30, 2008, by and between the Company and each of the Senior Creditors, the Senior Creditors have purchased, among other securities, $500,000 in principal amount of secured convertible debentures and the Company has agreed to sell and the Senior Creditors have the right to purchase an additional $901,157.00 in principal amount of secured convertible indentures from the Company, all of which indebtedness is and shall remain secured by perfected first priority liens and security interests on all of the Company’s assets in favor of the Senior Creditors (any and all such secured convertible debentures, collectively, the “2008 Senior Creditor Debentures”, and together with the Montgomery Debenture, the “Senior Debentures”).

B. The Company and the Subordinated Creditor are parties to (1) that certain Settlement Agreement made and entered into as of April 15, 2008 (the “Settlement Agreement”) pursuant to which, inter alia, the Company has or will issue to the Subordinated Creditor a Subordinated Secured Convertible Debenture (the “Subordinated Debenture”) in the original principal balance of $465,000. The indebtedness evidenced by the Subordinated Debenture shall be secured by subordinated liens and security interests in substantially all of the Company’s assets.

C. It is a condition precedent to the Company’s entry into the Settlement Agreement that the Subordinated Creditor enter into deliver this Agreement with the Senior Creditors to provide for the subordination of the Company’s indebtedness to the Subordinated Creditor. The Subordinated Creditor has agreed to the subordination of all of the Company’s indebtedness to it, upon the terms and subject to the conditions set forth in this Agreement.

Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

1.1 Certain Other Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now or hereafter in effect, or any successor statute.

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“Bankruptcy Law” means the Bankruptcy Code and any other federal, state, or foreign law for the relief of debtors.

“Collateral” means all assets and rights of any nature, wherever located, whether in existence or hereafter arising or acquired, of the Company.

“Disposition” or “Dispose” means the sale, assignment, transfer, license, lease (as lessor), or other disposition of any property by any person (or the granting of any option or other right to do any of the foregoing).

“Distribution” means any payment or distribution by any Person of assets of any kind or character (whether in cash, securities, assets, by set-off, or otherwise and including by purchase redemption or other acquisition).

“Enforcement Action” means any action by the Subordinated Creditor to enforce payment or performance by the Company of any of its Subordinated Debt or Subordinated Debt Agreements, including, but not limited to, any of the following: (a) acceleration of the maturity of Subordinated Debt, (b) commencement of, prosecution of, or participation in any lawsuit, action or proceeding, whether private, judicial, equitable, administrative, or otherwise, against the Company, including without limitation (x) the commencement or joining with any other creditors in the commencement of any Reorganization, (y) the initiation, prosecution and/or completion of a judicial or non-judicial foreclosure action (including without limitation the recordation of any notice of default or notice of sale), or (z) the acceptance of a deed in lieu of foreclosure or strict foreclosure, (c) the exercise of any right of setoff for the collection of any amounts due in respect of the Subordinated Debt, (d) exercise of any Secured Creditor Remedy; or (e) in the event of an Reorganization: (i) prosecuting a motion for relief from the automatic stay to exercise an Enforcement Action; (ii) objecting to the Senior Creditors’ motion for relief from the automatic stay to foreclose on and sell any of the Collateral; (iii) seeking to provide debtor in possession loans or advances to the Company wherein Senior Creditors’ liens would be subordinated in priority, (iv) seeking or acquiescing in any request to convert an Reorganization under chapter 11 of Title 11 of the Bankruptcy Code to a case under chapter 7 of Title 11 of the Bankruptcy Code; (v) seeking the appointment of a trustee or examiner with expanded powers for the Company or any of its subsidiaries or affiliates, if any; (vi) opposing the confirmation of the Company’s plan of reorganization if such action might adversely affect the Company’s business or the Company’s ability to repay the Senior Debt. Notwithstanding the foregoing, none of the following shall constitute an “Enforcement Action” for purposes of this Agreement: (x) the delivery of any (unrecorded) notice of default or other notice to the Company pursuant to or in connection with the Subordinated Debt Agreements, or (y) the filing by Subordinated Creditor of a proof of claim in a Reorganization, which proof of claim indicates Subordinated Creditor’s subordination hereunder and otherwise complies with the terms of this Agreement.

“Lien” means any mortgage, deed of trust, pledge, security interest, assignment, deposit arrangement, judgment lien, attachment, writ, charge or encumbrance, lien (statutory or other) or other preferential arrangement (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing or any agreement to give any security interest).

“Reorganization” of a Person means (i) any distribution of assets of that Person upon any voluntary or involuntary dissolution, winding up, total or partial liquidation or reorganization, (ii) any bankruptcy or other action pursuant to the Bankruptcy Code or any insolvency, receivership or other statutory or common law proceeding or arrangement involving a readjustment of the obligations of that Person, (iii) any assignment for the benefit of creditors of that Person, or (iv) any marshalling of the assets or obligations of that Person.

“Secured Creditor Remedies” means any action by a secured creditor in furtherance of the sale, foreclosure, realization upon, or the repossession or liquidation of any of the Collateral, including without limitation, (i) the exercise of any remedies or rights of a “Secured Creditor” under Article 9 of the Uniform Commercial Code, as enacted in the State of New York (or, to the extent the laws of any other state govern the perfection, effect of perfection, priority or enforcement of any rights of the parties hereto with respect to the exercise of their rights as secured parties, the Uniform Commercial Code as enacted in such other jurisdiction), such as, without limitation, the notification of account debtors; (ii) the exercise of any remedies available to a judgment creditor; (iii) appointment of a receiver; or (iv) any other remedy available in respect of the Collateral available to such secured creditor under any agreement to which it is a party.

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“Secured Creditors’ Agreements” means, collectively, the Senior Debt Agreements and the Subordinated Debt Agreements.

“Senior Credit Facility” means one or more credit facilities entered into by and among the Company and one or more commercial banks or financial institutions and providing for senior term or revolving credit borrowings (including the issuance of letters of credit) of a type similar to credit facilities typically entered into by commercial banks and financial institutions and one or more commercial paper or other senior securities programs pursuant to which the Company is able to raise monies in the capital markets, including in each case any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit facilities, commercial paper and senior securities programs and related agreements may be amended, extended, refinanced, renewed, restated, replaced or refunded from time to time.

“Senior Debt” means all present and future indebtedness, liabilities and other obligations of the Company to the Senior Creditors or any of them under or in connection with the Senior Debt Agreements or otherwise, whether created under, arising out of or in connection with the Senior Debt Agreements or otherwise, including all unpaid principal of any Senior Debentures, all interest accrued thereon, all fees, costs, expenses, premiums and reimbursements due under any of the Senior Debt Agreements, all indemnification obligations and all other amounts payable by Company to the Senior Creditors or any of them thereunder, or in connection therewith or otherwise, and any other senior indebtedness of the Company to which the Senior Debt held by the Senior Creditors agree to subordinate to, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined.

“Senior Debt Agreements” means, collectively, the Assignment Agreement, the Senior Creditor D&W Purchase Agreement, the Senior Debentures, any security agreements, pledge agreements, and any and all other documents and security instruments executed in connection therewith, and all other agreements and instruments executed and delivered by Company in connection therewith or otherwise creating any financial obligation of the Company in favor of the Senior Creditors or any of them.

“Senior Debt Collateral” means all Collateral in which one or more of the Senior now has or at any time obtains a Lien.

“Subordinated Debt” means all indebtedness, liabilities and other obligations of the Company to the Subordinated Creditor, whether now existing or hereafter arising and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including all amounts payable by Company to the Subordinated Creditor under or in connection with the Subordinated Debt Agreements or otherwise including, without limitation, all amounts due to the Subordinated Creditor pursuant to the Subordinated Debenture and all expenses and costs incurred by the Subordinated Creditor in connection with the enforcement of any of its rights under the Subordinated Agreements.

“Subordinated Debt Agreements” means, collectively, the Settlement Agreement, the Subordinated Debenture, any security agreements and any and all other documents and security instruments executed in connection therewith, and all other agreements, judgments, orders and instruments executed and delivered by Company in connection therewith or otherwise creating any financial obligation of the Company in favor of the Subordinated Creditor.

“Subordinated Debt Payment” means any payment or distribution by or on behalf of the Company, directly or indirectly, of assets of the Company of any kind or character, whether in cash, property or securities, including on account of the purchase, redemption or other acquisition of the Subordinated Debt, as a result of any collection, sale or other disposition of collateral, or by setoff, exchange or in any other manner, for or on account of the Subordinated Debt.

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1.2 Interpretation. In this Agreement, except to the extent the context otherwise requires (i) any reference in this Agreement to an Article, Section, Schedule or Exhibit is a reference to an article, section schedule or exhibit of or to this Agreement, respectively, and to a subsection or clause is, unless otherwise stated, a reference to a subsection or a clause of the Section or subsection in which the reference appears; (ii) the words “hereof,” “herein,” “hereto,” “hereunder” and the like refer to this Agreement as a whole and not merely to the specific Article, Section, subsection, paragraph or clause in which the reference appears; (iii) the meaning of defined terms shall be equally applicable to both the singular and plural forms of the terms defined; (iv) the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation”; (v) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto; (vi) references to statutes or regulations are to be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation referred to; and (vii) the captions and headings are for convenience of reference only and shall not affect the construction of this Agreement.

ARTICLE II

AGREEMENT OF SUBORDINATION

2.1 Subordination to Payment of Senior Debt. All Subordinated Debt Payments on account of the Subordinated Debt shall be subject, subordinate and junior in right of payment and exercise of remedies to the prior payment in full in cash of the Senior Debt.

2.2 Subordination of Liens. All Liens of the Subordinated Creditor now existing or hereafter acquired in any assets that serve as Senior Debt Collateral for all or any portion of the Senior Debt or the Subordinated Debt shall be subject, subordinate and junior in all respects and at all times to the Liens of the Senior Creditors now or hereafter existing therein, regardless of the time or order of attachment or perfection of such Liens, the time or order of filing of financing statements, the acquisition of purchase money or other Liens, the time of giving or failure to give notice of the acquisition or expected acquisition of any purchase money or other Liens, or any other circumstances whatsoever.

2.3 Benefit of Subordination Provisions. The provisions of this Agreement relating to the subordination of the Subordinated Debt and the Liens relating thereto to the Senior Debt and the Liens relating thereto (collectively, the “Subordination Provisions”) are made for the benefit of the Senior Creditors collectively and each of them individually, and each of the Senior Creditors may proceed to enforce the Subordination Provisions.

2.4 No Challenge. The Subordinated Creditor shall not, whether in a Reorganization proceeding or otherwise, challenge the validity, perfection or relative priority of the Senior Creditors’ Liens nor any of the Senior Creditors’ right to prior payment established by this ARTICLE II.

2.5 Subordination to Senior Facilities, Private Equity and Venture Capital Investments. The Subordinated Creditor shall, upon the request and at the expense of the Company, promptly enter into an intercreditor and subordination agreement with the provider(s) of (1) any Senior Credit Facility if the entry by the Subordinated Creditor into any such agreement is a condition precedent to the Company’s ability to obtain such Senior Credit Facility and (2) any private equity and/or venture capital financing in the Company if the entry by the Subordinated Creditor into any such agreement is a condition precedent to the Company’s ability to obtain such private equity, venture capital or similar financing, and provided that the Senior Creditors, so long as the Senior Debt remains outstanding, also enter into such an intercreditor and subordination agreement required as a condition precedent by the provider(s) of such Senior Credit Facility, private equity or venture capital financing.

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ARTICLE III

SUBORDINATION UPON ANY DISTRIBUTION OF ASSETS OF THE COMPANY

In the event of any payment or Distribution of assets of the Company, whether in cash, property or securities, in connection with any Reorganization of the Company or otherwise:

(a) all amounts owing on account of the Senior Debt shall first be paid in full in cash before any Subordinated Debt Payment is made; and

(b) to the extent permitted by applicable law, any Subordinated Debt Payment to which the Subordinated Creditor would be entitled but for the provisions of this Agreement shall be paid or delivered by the trustee in bankruptcy, receiver, assignee for the benefit of creditors or other liquidating Person making such payment or distribution directly to the Senior Creditors for application to the payment of the Senior Debt in accordance with clause (a), before making any payment or Distribution or provision therefor to the Subordinated Creditor in respect of the Subordinated Debt.

ARTICLE IV

PAYMENT BLOCKAGE

Notwithstanding any provision to the contrary herein or in any of the Subordinated Debt Agreements, until such time as the Senior Debt has been indefeasibly repaid in full in cash, or fully converted into shares of common stock of Airbee, and all commitments to purchase or lend any additional Senior Debt have terminated (the “Discharge of the Senior Debt”), the Company shall not make, and the Subordinated Creditor shall not demand, accept or receive, any Subordinated Debt Payment; provided, that so long as no Default or Event of Default with respect to any of the Senior Debt shall have occurred and be continuing (and the making of any such payment shall not result in a Default with respect thereto), the Company may pay and the Subordinated Creditor may receive Subordinated Debt Payments exclusively constituting scheduled quarterly payments of interest on the Subordinated Debt at the contract (i.e., non-default) rate set forth in the Subordinated Debenture as and when such scheduled quarterly interest payments are due and payable pursuant to the terms of the Subordinated Debenture as in effect as of the date of its issuance.

ARTICLE V

SUBORDINATION OF REMEDIES

Notwithstanding any provision herein or in any Subordinated Debt Agreement to the contrary, until the Discharge of the Senior Debt has occurred, the following shall apply:

5.1 Senior Creditors’ Exercise of Rights as Secured Party. The Senior Creditors shall be permitted and each of them is hereby authorized to take any and all actions and to exercise any and all rights, remedies and options which any of them may have under the Senior Debt Agreements and sell or otherwise realize upon the collateral securing the Senior Debt, in each case upon the terms and subject to the conditions set forth therein, without regard to the Subordinated Creditor.

5.2 Remedies of Subordinated Creditor. The Subordinated Creditor shall not, without the prior written consent of the Senior Creditors (which may granted or denied in the exercise of their sole discretion), demand payment (other than a scheduled quarterly payment of interest which Company is permitted to make and the Subordinated Creditor is permitted to receive pursuant to the terms of this Agreement) with respect to or accelerate the maturity of the Subordinated Debt or commence or maintain any Enforcement Action against Company; provided, however, that the Subordinated Creditor may accelerate the maturity of the Subordinated Debt (but may not make any demand for payment of, or take any other collection or enforcement action with respect to, the Subordinated Debt) at any time following the acceleration by the Senior Creditors of all (but not less than all) of the Senior Debt.

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5.3 Management of Collateral. Notwithstanding anything to the contrary contained in any of the Senior Debt Agreements or the Subordinated Debt Agreements: (i) the Senior Creditors shall have the exclusive right to manage the Collateral, including the exclusive right to perform and enforce the terms of the Senior Debt Agreements with respect to the Collateral and to exercise and enforce all privileges and rights thereunder according to Senior Creditors’ sole discretion, including, without limitation, the exclusive right to enforce or settle insurance claims with respect to the Collateral, to pay, compromise, or settle competing claims, liens, or security interests affecting the Collateral, to take or retake control or possession of the Collateral, and to hold, prepare for sale, sell, lease, or liquidate the Collateral; (ii) neither Subordinated Creditor nor any party acting on its behalf, shall exercise any Secured Party Remedies with respect to the Collateral or any part thereof; and (iii) any and all proceeds of the Collateral which shall come into the possession, control, or custody of the Subordinated Creditor will be deemed to have been received for the account of Senior Creditors and shall be immediately delivered or paid, as applicable, over to the Senior Creditors. In connection with the provisions of Section 5.3(i) above, the Subordinated Creditor waives any and all rights to affect the method or challenge the appropriateness of any action by Senior Creditors with respect to the Collateral, and waives any claims or defenses it may have against the Senior Creditors, including any such claims or defenses based on any actions or omissions of any such person, in connection with the perfection, maintenance, enforcement, foreclosure, sale, liquidation, or release of any lien or security interest therein by the Senior Creditors or any of them, or any modification or waiver of any Senior Debt Agreements.

5.4 Sale of Collateral. Until the Discharge of the Senior Debt has occurred: (i) only the Senior Creditors shall have the right to restrict or permit, or approve or disapprove, the sale or disposition of the Collateral or any portion thereof; and (ii) immediately upon the sale or disposition of such Collateral by the Company with the consent of the Senior Creditors in connection with the exercise of any Secured Creditor Remedies, the Subordinated Creditor’s liens and security interest upon the Collateral sold shall be automatically, unconditionally and simultaneously released, and the Subordinated Creditor will promptly deliver (at the Company’s expense) such release, reconveyance, and termination documents as the Senior Creditors or the Company may reasonably require in connection therewith.

5.5 Insurance. In the event of the occurrence of a fire or other casualty resulting in damage to all or any portion of any Collateral (collectively, a “Casualty”):

(a) The Subordinated Creditor hereby waives any right to participate or join in any adjustment, compromise, or settlement of any claims resulting from a Casualty with respect to any Collateral;

(b) all proceeds received or to be received on account of a Casualty shall be applied in the manner or manners provided for in the Senior Debt Agreements until the Discharge of the Senior Debt and thereafter, the Company may instruct the insurer to pay any remaining insurance proceeds from such Casualty to the Subordinated Credit to the extent of the outstanding balance of the Subordinated Debt; and

(c) the Subordinated Creditor agrees to execute and deliver to the Senior Creditors any documents, instruments, agreements or further assurances reasonably required to effectuate any of the foregoing.

ARTICLE VI

PAYMENT OVER TO SENIOR CREDITORS

In the event that the Subordinated Creditor receives any Subordinated Debt Payments in contravention of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI, ARTICLE VII, or ARTICLE X before the Discharge of the Senior Debt has occurred, such Subordinated Debt Payments shall be held in trust for the benefit of the Senior Creditors and shall be paid over or delivered to the Senior Creditors for application to the payment in full in cash of all Senior Debt remaining unpaid to the extent necessary to give effect to ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI, ARTICLE VII, or ARTICLE X, after giving effect to any concurrent payments or distributions to the Senior Creditors in respect of the Senior Debt.

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ARTICLE VII

REORGANIZATION OF THE COMPANY

7.1 Rights regarding the Reorganization of the Company. Until the Discharge of the Senior Debt, the Subordinated Creditor shall not, without the prior written consent of the Senior Creditors, commence or join with any other Person in commencing any Reorganization proceeding of or against Company. The Senior Creditors shall have the sole right to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to take. The Subordinated Creditor acknowledges and agrees that any interest on the Senior Debt which accrues after the commencement of any such proceeding (or, if interest on any portion of the Senior Debt ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on any such portion of the Senior Debt if said proceedings had not been commenced) shall be included in the Senior Debt because it is the intention of the parties that the Senior Debt should be determined without regard to any rule of law or other principle which may relieve Company of any portion of such obligations. The Subordinated Creditor shall permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay the Senior Creditors, or allow the claim of the Senior Creditors in respect of, any such interest accruing after the date on which such proceeding is commenced.

7.2 Reorganization Matters.

(a) Enforceability and Continuing Priority. This Agreement shall be applicable both before and after the commencement of any Reorganization by or against the Company and all converted or succeeding cases in respect thereof. The relative rights of the Senior Creditors and the Subordinated Creditor in or to any distributions from or in respect of any Collateral or proceeds of Collateral, shall continue after the commencement of any Reorganization by or against the Company. Accordingly, the provisions of this Agreement are intended to be and shall be enforceable as a subordination agreement within the meaning of Section 510 of the Bankruptcy Code.

(b) Financing. Until Discharge of the Senior Debt has occurred, if the Company shall be subject to any Reorganization and the Senior Creditors consents to the use of cash collateral (as such term is defined in Section 363(a) of the Bankruptcy Code; herein, “Cash Collateral”), on which any Senior Creditor has a lien or to permit the Company to obtain financing provided by Senior Creditor under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (such financing, together with any Cash Collateral use, collectively a “DIP Financing”), then the Subordinated Creditor agrees that it will consent to such Cash Collateral use and raise no objection to such DIP Financing and to the extent the liens securing the Senior Debt are discharged, subordinated to or paripassu with such DIP Financing, the Subordinated Creditor will subordinate its liens in the Collateral to the liens securing such DIP Financing. If the Senior Creditors or any of them offer to provide DIP Financing that meets the requirements set forth above, the Subordinated Creditor agrees that it shall not, directly or indirectly, (x) provide or offer to provide DIP Financing or support any DIP Financing secured by a lien senior to or paripassu with the liens securing the Senior Debt, or (y) request or accept any form of adequate protection or any other relief except as provided in Section 7.2(e)(ii). In connection with any DIP Financing, if any liens on the Collateral held by any of the Senior Creditors are subject to a surcharge or are subordinated to an administrative priority claim, a professional fee “carve out,” or fees owed to the United States Trustee, then the liens on the Collateral of the Subordinated Creditor shall also be subordinated to such interest or claim and shall remain subordinated to the liens on the Collateral of Senior Creditor consistent with this Agreement.

(c) Sales. Until Discharge of the Senior Debt has occurred, the Subordinated Creditor agrees that it will consent, and will not object or oppose a motion to Dispose of any Collateral free and clear of the liens or the claims that are in favor of the Subordinated Creditor under Section 363 of the Bankruptcy Code if the Senior Creditors have consented to such Disposition of such assets.

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(d) Relief from the Automatic Stay. Until Discharge of the Senior Debt has occurred, the Subordinated Creditor agrees that it shall not seek (or support any other person, other than the Senior Creditors, seeking) relief from the automatic stay or any other stay in any Reorganization in respect of the Collateral, without the prior written consent of the Senior Creditors (which may be granted or withheld in the exercise of their sole discretion).

(e) Adequate Protection.

(i) Senior Creditors. In any Reorganization involving the Company, the Subordinated Creditor agrees that it shall not contest (or support any other person contesting):

(A) any request by the Senior Creditors for adequate protection (whether in the form of payments, liens, a priority administrative expense claim, or otherwise);

(B) any objection by the Senior Creditors to any motion, relief, action, or proceeding based on the Senior Creditors claiming a lack of adequate protection (whether in the form of payments, liens, a priority administrative expense claim, or otherwise);

(C) the payment of interest, fees, expenses, or other amounts to Senior Creditor under Section 506(b) or 506(c) of the Bankruptcy Code or otherwise.

(ii) Subordinated Creditor. In any Reorganization involving the Company:

(A) Replacement Liens.

(1) Until Discharge of the Senior Debt has occurred, if the Senior Creditors are granted adequate protection in the form of a replacement lien (on existing or future assets of the Company) in connection with any DIP Financing, then the Subordinated Creditor shall also be entitled to seek, without objection from the Senior Creditors, adequate protection in the form of a replacement lien (on existing or future assets of the Company), which replacement lien, if obtained, shall be subordinate to the liens securing the Senior Debt and the liens securing such DIP Financing on the same basis as the other liens securing the Subordinated Debt are subordinate to the Senior Debt under this Agreement; and

(2) In the event that the Subordinated Creditor is granted adequate protection in the form of a replacement lien (on existing or future assets of the Company), then the Subordinated Creditor agrees that the Senior Creditors shall also be entitled to seek, without objection from the Subordinated Creditor, a senior adequate protection lien on existing or future assets of the Company as security for the Senior Debt and for any DIP Financing provided by the Senior Creditors. Any adequate protection lien on such existing or future assets securing the Subordinated Debt shall be subordinated (i) to the lien on such collateral securing the Senior Debt and any such DIP Financing provided by the Senior Creditors, and (ii) to any other liens granted to the Senior Creditors as adequate protection on the same basis as the other liens securing the Subordinated Debt are so subordinated to such Senior Debt under this Agreement.

(B) No Distributions. In any Reorganization involving the Company, the Subordinated Creditor shall not seek (a) adequate protection in the form of Distributions in respect of the Subordinated Debt, nor (b) adequate protection in the form of Distributions with respect to their rights to the Collateral.

(iii) Allowance of Postpetition Accrual. The Subordinated Creditor shall not object to, oppose, or challenge any claim by Senior Creditor for allowance in any Reorganization of Senior Debt consisting of post-petition interest, fees, or expenses.

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(f) Section 1111(b) of the Bankruptcy Code. The Subordinated Creditor shall not object to, oppose, support any objection, or take any other action to impede, the right of the Senior Creditors to make an election under Section 1111(b)(2) of the Bankruptcy Code. The Subordinated Creditor waives any claim it may hereafter have against each Senior Creditor arising out of the election by any or all Senior Creditors of the application of Section 1111(b)(2) of the Bankruptcy Code.

(g) No Waiver. Nothing contained herein shall prohibit or in any way limit the Senior Creditors from objecting in any Reorganization involving the Company to any action taken by the Subordinated Creditor, including the seeking by the Subordinated Creditor of adequate protection or the assertion by the Subordinated Creditor of any of its rights and remedies under the Subordinated Debt Agreements.

(h) Avoidance Issues. If Senior Creditor is required in any Reorganization or otherwise to turn over, disgorge or otherwise pay to the estate of the Company any amount paid in respect of the Senior Debt (a “Senior Creditor Recovery”), then Senior Creditor shall be entitled to a reinstatement of Senior Debt with respect to all such recovered amounts, and all rights, interests, priorities and privileges recognized in this agreement shall apply with respect to any such Senior Creditor Recovery. If this Agreement shall have been terminated prior to such Senior Creditor Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement.

(i) Plan of Reorganization.

(a) If in any Reorganization involving the Company, debt obligations of the reorganized debtor, whether or not secured by liens upon any property of the reorganized debtor, are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, (a) on account of Senior Debt, or (b) on account of the Subordinated Debt, or (c) all on account of the Senior Debt and the Subordinated Debt, then the Subordinated Creditor shall have the right to receive such debt obligations so long as the provisions of this Agreement (x) survive the distribution of such debt obligations pursuant to such plan and (y) apply with like effect to such debt obligations and the liens securing such debt obligations, and

(b) The Subordinated Creditor shall not propose or support any plan of reorganization that is inconsistent with the priorities or other provisions of this Agreement.

(j) Prohibition of Payments of Subordinated Debt on Acceleration or in Reorganization.

(a) Upon (i) any acceleration of the principal amount due on any Subordinated Debt which has not been rescinded or revoked, or (ii) any payment or distribution of assets of the Company, of any kind or character, whether in cash, property or securities, following commencement of an Reorganization by or against the Company, there shall be a Discharge of the Senior Debt, before any Distribution is made on account of any of the Subordinated Debt; and following commencement of a Reorganization, any Distribution in respect of the Subordinated Debt to which the Subordinated Creditor would be entitled, except for the provisions hereof, shall be paid by the Company or any other Person making such Distribution, or by the Subordinated Creditor if received by it, directly to the Senior Creditors, to the extent necessary to result in the Discharge of the Senior Debt, before any Distribution is made to the Subordinated Creditor.

(b) In any Reorganization by or against the Company,

(A) The Senior Creditors may, and are hereby irrevocably authorized and empowered (in their own names or in the name of the Subordinated Creditor or otherwise), but shall have no obligation to (A) demand, sue for, collect and receive every payment or distribution referred to in this ARTICLE VII and give acquittance therefor and (B) file claims and proofs of claim in respect of the Subordinated Debt, provided that the Senior Creditors may only file claims and proofs of claims in respect of the Subordinated Debt if (1) the Subordinated Creditor has failed to file such claims and proofs of claim and (2) there shall remain not more than 20 days before such action is barred, prohibited or otherwise cannot be taken; and

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(B) The Subordinated Creditor will duly and promptly take such action as the Senior Creditors may reasonably request (A) to collect the Subordinated Debt for the account of the Senior Creditors and to file appropriate claims or proofs of claim with respect thereto, (B) to execute and deliver to the Senior Creditors such powers of attorney, assignments or other instruments as the Senior Creditors may request in order to enable it to enforce any and all claims with respect to, and any security interests and other liens securing payment of, the Subordinated Debt, and (C) to collect and receive for the account of the Senior Creditors any and all Distributions which may be payable or deliverable upon or with respect to the Subordinated Debt; provided that any reasonable and documented costs incurred in complying with any provision of this paragraph, including reasonable attorneys’ fees, shall be paid by the Senior Creditors to the extent they are not paid by the Company or otherwise recovered by the Subordinated Creditor.

(k) Payments Held in Trust/Turnover. In the event that, notwithstanding the foregoing provisions of this ARTICLE VII, any Distribution or Subordinated Debt Payment prohibited by this Agreement shall be received by the Subordinated Creditor before there has been a Discharge of the Senior Debt, such Distribution or Subordinated Debt Payment shall be held in trust for the benefit of and shall be paid over to or delivered to Senior Creditor, until there has been a Discharge of the Senior Debt.

ARTICLE VIII

AMENDMENTS TO SENIOR DEBT; AMENDMENTS TO SUBORDINATED DEBT

8.1 Amendments to Senior Debt. At any time and from time to time, without notice to or the consent of the Subordinated Creditor, without incurring responsibility to the Subordinated Creditor and without impairing or releasing, the subordination provided for herein or otherwise impairing the rights of the Senior Creditors hereunder: (i) additional Senior Debt may be incurred, (ii) the time for the Company’s performance of or compliance with any of its agreements contained in the Senior Debt Agreements may be extended or such performance or compliance may be waived by the Senior Creditors; (iii) the agreements of the Senior Creditors and the Company with respect to the Senior Debt Agreements may from time to time be modified by the Company and the Senior Creditors for the purpose of adding any requirements thereto, or changing in any manner the rights and obligations of the Company and the Senior Creditors thereunder; (iv) the manner, place or terms for payment of Senior Debt or any portion thereof may be altered or the terms for payment extended, or the Senior Debt may be renewed in whole or in part; (v) the maturity of the Senior Debt may be accelerated in accordance with the terms of any present or future agreement among the Company and the Senior Creditors; (vi) any Collateral may be sold, exchanged, released or substituted and any Lien in favor of the Senior Creditors may be terminated, subordinated or fail to be perfected or become unperfected; (vii) any Person liable in any manner for Senior Debt may be discharged, released or substituted; and (viii) all other rights against the Company, any other Person or with respect to any collateral may be exercised (or the Senior Creditors may waive or refrain from exercising such rights).

8.2 Amendments to Subordinated Debt. Neither the Company nor the Subordinated Creditor shall, without the prior written consent of the Senior Creditors granted or withheld in their sole discretion, agree to or permit any amendment, modification or waiver of any provisions of any of the Subordinated Debt Agreements (including any amendment, modification or waiver pursuant to an exchange of other securities or instruments for outstanding Subordinated Debt) if the effect of such amendment, modification or waiver is to: (i) increase the interest rate on the Subordinated Debt or change (to earlier dates) the dates upon which principal and interest are due thereon; (ii) alter the redemption, prepayment, conversion, or subordination provisions thereof; (iii) alter the covenants and events of default in a manner which would make such provisions more onerous or restrictive to Company; or (iv) otherwise increase the obligations of the Company in respect of the Subordinated Debt or confer additional rights upon the Subordinated Creditor which individually or in the aggregate would be adverse in any respect to the Company or the Senior Creditors and each of them.

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ARTICLE IX

CERTAIN AGREEMENTS OF THE SUBORDINATED CREDITOR

9.1 No Interference. The Subordinated Creditor acknowledges that Company has granted the Senior Creditors a security interest in certain of the Company’s assets, including all of the Company’s assets that are part of the collateral securing the Subordinated Debt, and shall not interfere with or in any manner oppose a disposition of any such collateral by the Senior Creditors in accordance with applicable law.

9.2 Acquisition of Liens or Guaranties. The Subordinated Creditor shall not, without the prior written consent of the Senior Creditors, acquire any right or interest in or to any property of the Company or accept any guaranties of the Subordinated Debt from the Company or any Person.

9.3 Rights of Senior Creditors Not to Be Impaired. No right of the Senior Creditors to enforce the subordination provided for herein or to exercise its other rights hereunder shall at any time in any way be prejudiced or impaired by any act or failure to act by Company, the Senior Creditors or any of them hereunder or under or in connection with the Senior Debt Agreements or by any noncompliance by Company with the terms of this Agreement or the Senior Debt Agreements, regardless of any knowledge thereof the Senior Creditors or any of them may have or otherwise be charged with.

9.4 Financial Condition of the Company. The Subordinated Creditor shall not have any right to require the Senior Creditors or any of them to obtain or disclose any information with respect to: (i) the financial condition or character of the Company or the ability of the Company to pay and perform the Senior Debt or the Subordinated Debt; (ii) the Senior Debt; (iii) the collateral or any other security for any or all of the Senior Debt; (iv) the existence or nonexistence of any guarantees of, or any other subordination agreements with respect to, all or any part of the Senior Debt; (v) except as required hereunder, any action or inaction on the part of the Senior Creditors or any Lender or any other Person; or (vi) any other matter, fact or occurrence whatsoever.

9.5 Waivers by Subordinated Creditor.

(a) Senior Debt.

(i) All Senior Debt at any time incurred by the Company shall be deemed to have been incurred, and all Senior Debt held by any Senior Creditor shall be deemed to have been extended, acquired or obtained, as applicable, in reliance upon this Agreement, and the Subordinated Creditor hereby waives (i) notice of acceptance, or proof of reliance, by each Senior Creditor of this Agreement, and (ii) notice of the existence, renewal, extension, accrual, creation, or non-payment of all or any part of the Senior Debt. Nothing contained in this Agreement shall preclude Senior Creditor from discontinuing the extension of credit to the Company (whether under the Senior Debt Agreements or otherwise) or from taking (without notice to Subordinated Creditor, the Company, or any other Person) any other action in respect of the Senior Debt or the Collateral which such Senior Creditor is otherwise entitled to take with respect to the Senior Debt or the Collateral.

(ii) Neither Senior Creditors nor or any of their respective affiliates, partners, directors, officers, employees, or agents (collectively, the “Senior Creditor Parties”) shall be liable for failure to demand, collect, or realize upon any of the Collateral or any proceeds or for any delay in doing so or shall be under any obligation to sell or otherwise Dispose of any Collateral or proceeds thereof or to take any other action whatsoever with regard to the Collateral or any part or proceeds thereof. If any Senior Creditor honors (or fails to honor) a request by the Company for an extension of credit pursuant to any of the Senior Debt Agreements, whether such Senior Creditor has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of the Subordinated Debt Agreements or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if such Senior Creditor otherwise should exercise any of its contractual rights or remedies under the Senior Debt Agreements (subject to the express terms and conditions hereof), the Senior Creditor Parties shall not have any liability whatsoever to the Subordinated Creditor as a result of such action, omission, or exercise. The Senior Creditor Parties will be entitled to manage and supervise their loans and extensions of credit under the Senior Debt Agreements as the Senior Creditors may, in their sole discretion, deem appropriate, and the Senior Creditors may manage their loans and extensions of credit without regard to any rights or interests that the Subordinated Creditor may have in the Collateral or otherwise except as otherwise expressly set forth in this Agreement. The Subordinated Creditor agrees that the Senior Creditor Parties shall not incur any liability as a result of a sale, lease, license, application or other Disposition of all or any portion of the Collateral or any part or proceeds thereof. The Senior Creditor Parties may, from time to time, enter into agreements and settlements with the Company as they may determine in their sole discretion without impairing any of the subordinations, priorities, rights or obligations of the parties under this Agreement, including, without limitation, substituting Collateral, releasing any lien and releasing the Company. The Subordinated Creditor waives any and all rights it may have to require the Senior Creditor Parties to marshal assets, to exercise rights or remedies in a particular manner, or to forbear from exercising such rights and remedies in any particular manner or order.

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(b) Notice of Acceptance and Other Waivers. To the fullest extent permitted by applicable law, the Subordinated Creditor hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or other financial accommodations made or extended under any of the Senior Debt Agreements, or the creation or existence of any Senior Debt; (iii) notice of the amount of the Senior Debt; (iv) notice of any adverse change in the financial condition of the Company or of any other fact that might increase Subordinated Creditor’s risk hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to any instrument among the Senior Debt Agreements; (vi) notice of any Default or Event of Default under the Senior Debt Agreements or otherwise relating to the Senior Debt; (vii) all other notices (except if such notice is specifically required to be given by the Company to the Subordinated Creditor under the Settlement Agreement) and demands to which the Subordinated Creditor might otherwise be entitled.

(c) Lawsuits; Defenses; Setoff. To the fullest extent permitted by applicable law, the Subordinated Creditor (i) waives the right by statute or otherwise to require the Senior Creditors to institute suit against the Company or to exhaust any rights and remedies which the Senior Creditors or any of them has or may have against the Company; (ii) waives any defense arising by reason of any disability or other defense (other than the defense that the Discharge of the Senior Debt has occurred) of the Company or by reason of the cessation from any cause whatsoever of the liability of the Company in respect thereof, (iii) waives any rights to assert against any Senior Creditor Party any defense (legal or equitable), set-off, counterclaim, or claim which the Subordinated Creditor may now or at any time hereafter have against the Company or any other party liable to any Senior Creditor Party or the Subordinated Creditor, (iv) waives any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of any Senior Debt, any Subordinated Debt or any security for either; (v) waives any defense arising by reason of any claim or defense based upon an election of remedies by any Senior Creditor; and (vi) waives the benefit of any statute of limitations affecting Subordinated Creditor’s obligations hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Senior Debt shall similarly operate to defer or delay the operation of such statute of limitations applicable to such Subordinated Creditor’s obligations hereunder.

ARTICLE X

SUBROGATION

10.1 Subrogation. Until the Discharge of the Senior Debt, the Subordinated Creditor shall not have, and shall not directly or indirectly exercise, any rights that it may acquire by way of subrogation under this Agreement by any payment or distribution to the Senior Creditors hereunder or otherwise. Upon the Discharge of the Senior Debt, the Subordinated Creditor shall be subrogated to the rights of the Senior Creditors to receive payments or distributions applicable to the Senior Debt until the Subordinated Debt is paid in full. For purposes of the foregoing subrogation, no payments or distributions to the Senior Creditors of any cash, property or securities to which the Subordinated Creditor would be entitled but for the provisions of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI, ARTICLE VII, or ARTICLE X shall, as among Company, its creditors (other than the Senior Creditors and each of them) and the Subordinated Creditor, be deemed to be a payment by Company to or on account of the Senior Debt.

10.2 Payments Over. If any payment or distribution to which the Subordinated Creditor would otherwise have been entitled but for the provisions of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI, ARTICLE VII, or Article X shall have been applied pursuant to such Sections to the payment of amounts payable under the Senior Debt, the Subordinated Creditor shall be entitled to receive from the Senior Creditors any payments or distributions received by the Senior Creditors in excess of the amount sufficient to pay in full in cash all amounts payable under or in respect of the Senior Debt. If any such excess payment is made to the Senior Creditors, upon written demand the Senior Creditors shall promptly remit such excess to the Subordinated Creditor and until so remitted the Senior Creditors shall hold such excess payment for the benefit of the Subordinated Creditor.

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ARTICLE XI

CONTINUING AGREEMENT; REINSTATEMENT

11.1 Continuing Agreement. This Agreement is a continuing agreement of subordination and shall continue in effect and be binding upon the Subordinated Creditor until the Discharge of the Senior Debt. The subordinations, agreements and priorities set forth herein shall remain in full force and effect regardless of whether any party hereto in the future seeks to rescind, amend, terminate or reform, by litigation or otherwise, its respective agreements with the Company.

11.2 Reinstatement. This Agreement shall continue to be effective or shall be reinstated, as the case may be, if, for any reason, any payment of the Senior Debt by or on behalf of the Company shall be rescinded or must otherwise be restored by the Senior Creditors or any of them, whether as a result of an insolvency event or otherwise.

ARTICLE XII

NO FIDUCIARY DUTY

The Senior Creditors and the Subordinated Creditor acknowledge and agree that none of them has any fiduciary duty to the other(s) hereunder (and, additionally, the Subordinated Creditor acknowledges and agrees that none of the Secured Creditor Parties has any fiduciary or other duty towards him, except for the duty of the Senior Creditors to perform or observe their express obligations to pay over excess monies actually held by them (following the Discharge of the Senior Debt) to the Subordinated Creditor as expressly provided under the terms of this Agreement), and that in approving or disapproving any matter or proposed action hereunder, each may act in its sole and absolute discretion and in the manner which it considers to be in its own best interests, except as may be specifically provided otherwise herein. Further, the Senior Creditors and the Subordinated Creditor acknowledge that none of them has made any warranties, express or implied, to the other nor does either (nor any Secured Creditor Party) assume any liabilities or duties to the other with respect to Company’s financial condition or otherwise except as expressly provided otherwise herein.

ARTICLE XIII

NO TRANSFER OF SUBORDINATED DEBT

The Subordinated Creditor may not assign or transfer its rights and obligations under the Subordinated Credit Agreements, or any of them, or with respect to any interest in the Subordinated Debt without the prior written consent of the Senior Creditors, and any such permitted transferee or assignee, as a condition to acquiring such rights and obligations under the Subordinated Debt Agreements, or with respect to any interest in the Subordinated Debt, shall agree to be bound hereby in an agreement in form and substance satisfactory to the Senior Creditors. Any purported assignment or transfer of any of the Subordinated Creditor’s rights or interests in, to or with respect to the Subordinated Credit Documents or the Subordinated Debt shall be void ab initio.

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ARTICLE XIV

OBLIGATIONS OF THE COMPANY NOT AFFECTED

The provisions of this Agreement are intended solely for the purpose of defining the relative rights against Company of the Subordinated Creditor, on the one hand, and the Senior Creditors, on the other hand. Nothing contained in this Agreement shall (i) impair, as between Company and the Subordinated Creditor, the obligation of the Company to pay the principal of or interest on the Subordinated Debenture and its other obligations with respect to the Subordinated Debt as and when the same shall become due and payable in accordance with the terms thereof, or (ii) otherwise affect the rights against Company of the Subordinated Creditor, on the one hand, and the creditors of the Company (other than the Senior Creditors), on the other hand.

ARTICLE XV

REPRESENTATIONS AND WARRANTIES

15.1 Representations and Warranties of The Subordinated Creditor. The Subordinated Creditor represents and warrants to the Senior Creditors that:

(a) Powers. The Subordinated Creditor is an individual who has all the requisite power and authority to execute, deliver and perform its obligations under this Agreement.

(b) No Conflict. The execution, delivery and performance by the Subordinated Creditor of this Agreement does not and will not result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Subordinated Creditor is a party or by which it or its properties may be bound or affected or violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree or the like binding on or affecting the Subordinated Creditor.

(c) Binding Obligation. This Agreement constitutes the legal, valid and binding obligation of the Subordinated Creditor, enforceable against the Subordinated Creditor in accordance with its terms.

(d) Governmental Consents. No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Person is required for the due execution, delivery or performance by the Subordinated Creditor of this Agreement.

(e) No Prior Assignment. The Subordinated Creditor has not previously assigned any interest in the Subordinated Debt; no Person other than the Subordinated Creditor owns an interest in the Subordinated Debt (whether as joint holders of the Subordinated Debt, participants or otherwise); and the entire Subordinated Debt is owing only to Subordinated Creditor.

(f) Independent Investigation. The Subordinated Creditor has undertaken its own independent investigation of the financial condition of the Company and all other matters pertaining to this Agreement and is not relying in any manner upon any representation or statement of the Senior Creditors or any of them with respect thereto. The Subordinated Creditor is aware of the terms of the Senior Debt Agreements and is in a position to obtain, and it hereby assumes full responsibility for obtaining, any additional information concerning the financial condition of the Company and any other matters pertinent hereto that the Subordinated Creditor may desire. The Subordinated Creditor is not relying upon or expecting the Senior Creditors or any of them to furnish to it any information now or hereafter in any Senior Creditor’s possession concerning the financial condition of the Company or any other matter.

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15.2 Representations and Warranties of the Senior Creditors. The Senior Creditors represent and warrant to the Subordinated Creditor that, to the Senior Creditors’ actual knowledge:

(a) Powers. The Senior Creditors possess all the requisite power and authority to execute, deliver and perform their obligations under this Agreement.

(b) No Conflict. The execution, delivery and performance by the Senior Creditors of this Agreement does not and will not result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Senior Creditors are a party or by which they or their properties may be bound or affected or violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree or the like binding on or affecting the Senior Creditors.

(c) Binding Obligation. This Agreement constitutes the legal, valid and binding obligation of the Senior Creditors, enforceable against the Senior Creditors in accordance with its terms.

(d) Governmental Consents. No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Person is required for the due execution, delivery or performance by the Senior Creditors of this Agreement.

(e) No Prior Assignment. The Senior Creditors have not previously assigned any interest in the Subordinated Debt; no Person other than the Senior Creditors owns an interest in the Senior Debt (whether as joint holders of the Senior Debt, participants or otherwise); and the entire Senior Debt is owing only to Senior Creditors.

(f) Independent Investigation. The Senior Creditors have undertaken their own independent investigation of the financial condition of the Company and all other matters pertaining to this Agreement and are not relying in any manner upon any representation or statement of the Subordinated Creditor with respect thereto. The Senior Creditors are aware of the terms of the Subordinate Debt Agreements and are in a position to obtain, and they hereby assume full responsibility for obtaining, any additional information concerning the financial condition of the Company and any other matters pertinent hereto that the Senior Creditors may desire. The Senior Creditors are not relying upon or expecting the Subordinate Creditor to furnish to them any information now or hereafter in the Subordinate Creditor’s possession concerning the financial condition of the Company or any other matter.

ARTICLE XVI

FURTHER ASSURANCES AND ADDITIONAL ACTS

16.1 Endorsement of Subordinated Debt Agreements. The Subordinated Debt Agreements and all other documents, financing statements, and instruments evidencing or perfecting any liens securing any of the Subordinated Debt shall be endorsed with a legend noting that the Subordinated Debt Agreements and such other documents and instruments are subject to this Agreement, and the Subordinated Creditor shall promptly deliver to the Senior Creditors evidence of the same.

16.2 Further Assurances and Additional Acts. The Subordinated Creditor and Company shall each execute, acknowledge, deliver, file, notarize and register at its own expense all such further agreements, instruments, certificates, financing statements, documents and assurances, and perform such further acts as the Senior Creditors shall deem necessary or appropriate to effectuate the purposes of this Agreement, and promptly provide the Senior Creditors with evidence of the foregoing satisfactory in form and substance to the Senior Creditors.

16.3 Attorney in Fact. Each Senior Creditor is hereby irrevocably constituted and appointed the attorney-in-fact of the Subordinated Creditor on the Subordinated Debt and to take all other action either in any Senior Creditor’s name or in the name of the Subordinated Creditor, which in the Senior Creditors’ opinion is necessary or desirable to enable the Senior Creditors to obtain all such payments on the Subordinated Debt that are to be turned over to the Senior Creditors pursuant to this Agreement.

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ARTICLE XVII

NOTICES

All notices and other communications provided for herein shall, unless otherwise stated herein, be in writing (including by telex or facsimile transmission) and shall be mailed, sent or delivered at or to the address or telex or facsimile number of the respective party or parties set forth on the signature pages hereof, or at or to such other address or telex or facsimile number as such party or parties shall have designated in a written notice to the other party or parties. All such notices and communications shall be effective (i) if delivered by hand, when delivered; (ii) if sent by mail, upon the earlier of the date of receipt or five (5) Business Days, after deposit in the mail, first class, postage prepaid; (iii) if sent by telex, upon receipt by the sender of an appropriate answerback; and (iv) if sent by facsimile transmission, when sent.

ARTICLE XVIII

NO WAIVER; CUMULATIVE REMEDIES

No failure on the part of the Senior Creditors to exercise, and no delay in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights and remedies under this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available to the Senior Creditors.

ARTICLE XIX

COSTS AND EXPENSES

19.1 Payments by the Company. The Company shall pay to the Senior Creditors on demand the reasonable out-of-pocket costs and expenses of the Senior Creditors, and the reasonable fees and disbursements of counsel to the Senior Creditors (including allocated costs of internal counsel), in connection with the negotiation, preparation, execution, delivery and administration of this Agreement and any amendments, modifications or waivers of the terms thereof.

19.2 Payments by Company and The Subordinated Creditor. Each of the Company and the Subordinated Creditor, jointly and severally, shall pay to the Senior Creditors on demand all actual costs and expenses of the Senior Creditors, and all actual fees and disbursements of counsel (including allocated costs of internal counsel), incurred in connection with the enforcement or attempted enforcement of, and preservation of rights or interests under, this Agreement, including any losses, costs and expenses sustained by the Senior Creditors as a result of any failure by the Subordinated Creditor to perform or observe its obligations contained in this Agreement. In addition, the Senior Creditors agree pay to the Subordinated Creditor on demand all reasonable and documented costs and expenses of the Subordinated Creditor, including reasonable and documented fees and disbursements of counsel, to the extent incurred by the Subordinated Creditor exclusively and directly due to any failure by the Senior Creditors to perform or observe their express obligations to pay over excess monies actually held by them (following the Discharge of the Senior Debt) to the Subordinated Creditor as expressly provided under the terms of this Agreement.

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ARTICLE XX

SURVIVAL

All covenants, agreements, representations and warranties made in this Agreement shall, except to the extent otherwise provided herein, survive the execution and delivery of this Agreement and shall continue in full force and effect for so long as any Senior Debt remains unpaid or the Commitment remains in effect. Without limiting the generality of the foregoing, the obligations of the Company and the Subordinated Creditor under ARTICLE XIX shall survive the Discharge of the Senior Debt.

ARTICLE XXI

MISCELLANEOUS

21.1 Benefits of Agreement. This Agreement is entered into for the sole protection and benefit of the parties hereto and their successors and assigns, and no other Person shall be a direct or indirect beneficiary of, or shall have any direct or indirect cause of action or claim in connection with, this Agreement.

21.2 Binding Effect. Subject to the provisions of this ARTICLE this Agreement shall be binding upon, inure to the benefit of and be enforceable by Company, The Subordinated Creditor and the Senior Creditors and their respective successors and assigns.

21.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF NEW YORK STATE’S GENERAL OBLIGATIONS LAW.

21.4 Waiver Of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY CREDITOR OR COMPANY OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

21.5 Submission to Jurisdiction. The Subordinated Creditor hereby (i) submits to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York County for the purposes of all legal proceedings arising out of or relating to this Agreement; (ii) waives to, the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any proceeding brought in such a court or any claim that any such proceeding brought in such a court has been brought in an inconvenient forum; (iii) agrees that service of process in any such action or proceeding may be affected by mailing a copy thereof by registered or certified mail (or any substantially similar form and mail), postage prepaid, to the Subordinated Creditor or the Company at its respective address set forth below each party’s respective signature hereon, or at such other address of which the Senior Creditors shall have been notified pursuant hereto; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction.

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21.6 Entire Agreement. This Agreement constitutes the entire agreement of the Company, the Senior Creditors and The Subordinated Creditor with respect to the matters set forth herein and supersedes any prior agreements, commitments, discussions and understandings, oral or written, with respect thereto. There are no conditions to the full effectiveness of this Agreement.

21.7 Amendments and Waivers. This Agreement may not be amended except by a writing signed by Company, The Subordinated Creditor and the Senior Creditors. No waiver of any rights of the Senior Creditors under any provision of this Agreement or consent to any departure by the Subordinated Creditor or Company therefrom shall be effective unless in writing and signed by the Senior Creditors. Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

21.8 Conflicts. In case of any conflict or inconsistency between any terms of this Agreement, on the one hand, and Subordinated Debt Agreements or any other document or instrument relating to the Subordinated Debt, on the other hand, then the terms of this Agreement shall control.

21.9 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Agreement shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed, so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement or the validity or effectiveness of such provision in any other jurisdiction.

21.10 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Facsimile, PDF and other electronically transmitted copies signatures on this Agreement shall be deemed the equivalent of original signatures.

21.11 Termination of Agreement. Upon the Discharge of the Senior Debt, this Agreement shall terminate and the Senior Creditors shall promptly execute and deliver to the Company and the Subordinated Creditor such documents and instruments as shall be necessary to evidence such termination; provided, however, that the obligations of the Company and the Subordinated Creditor under ARTICLE XX shall survive such termination.

[INTENTIONAL END OF PAGE]

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

SENIOR CREDITORS

BARTFAM, a California limited partnership By:  /s/ Thomas F. Bartman	Thomas F. Bartman, Managing Trustee of The
	William S. Bartman Marital Trust
Name: Thomas F. Bartman	/s/ Thomas F. Bartman
Title: General Partner
Judith A. Fiskin, Trustee of the Judith A.	Cecile Citron Bartman, Trustee of the
Fiskin Trust dated April 16, 1996	Cecile Citron Bartman Trust
/s/ Judith A. Fiskin, Trustee	/s/ Cecile Citron Bartman
David A. Bartman	John W. Bartman
/s/ David A. Bartman	/s/ John W. Bartman
Michael T. Bartman
/s/ Michael T. Bartman	Address:
	Care of:
	John W. Bartman and Thomas F. Bartman
	11777 San Vicente Blvd Suite 600
	Los Angeles, California 90049
	Facsimile: 310 826-8477
	with copies to:
	Manatt, Phelps & Phillips, LLP
	11355 W. Olympic Blvd.
	Los Angeles, CA 90064
	Attention: [_______________], Esq.
	Facsimile: (310) 312-4224

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SUBORDINATED CREDITOR:

/s/ Richard P. Sommerfeld, Jr.

Richard P. Sommerfeld, Jr

Address:

115 S. Oak Street

Falls Church, Virginia 22046

with copies to:

Savit & Szymkowicz, LLP

7315 Wisconsin Avenue

Suite 601N

Bethesda, Maryland 20814

Attention: Diana M. Savit, Esq.

Telephone: (301) 951-9191

COMPANY:

AIRBEE WIRELESS, INC.,

By;	/s/ E. Eugene Sharer
Name:	E. Eugene Sharer
Title:	President

 Address:

9400 Key West Avenue

Rockville, Maryland 20850

Attention: E. Eugene Sharer, President

Facsimile: (301) 57-1861

with copies to:

Stradling Yocca Carlson & Rauth

1600 Newport Center Drive Suite 1600

Newport Beach, California 92660

Attention: Shivbir S. Grewal, Esq.

Facsimile: (949) 725-4100

20

EX-4.4

Amendment No. 2 to Debenture and Warrant Purchase Agreement

This Amendment No. 2 to Debenture and Warrant Purchase Agreement (the “Agreement”) is effective as of April 15, 2008, by and between Airbee Wireless, Inc., a Delaware corporation (the “Company”) and each of the persons or entities listed on the signature page hereto (each, an “Investor” and collectively, the “Investors”). Capitalized terms used herein that are not defined shall have the meaning ascribed to them in the Purchase Agreement.

RECITALS

1. The Company and the Investors entered in that certain Debenture and Warrant Purchase Agreement dated as of January 30, 2008, as amended by Amendment No. 1 to Debenture and Warrant Purchase Agreement effective as of February 8, 2008 (the “Purchase Agreement”).

2. The Purchase Agreement provides, amongst other things, that the Investors shall exercise their Call Option no later than ten (10) calendar days following the Second Closing.

3. The Company has issued to BARTFAM, a California limited partnership, and one of the Investors named herein, that certain Convertible Debenture dated March 28, 2008 in the principal amount of $50,000.00 (the “March 28th Debenture”).

4. The Company and the Investors desire to amend the Purchase Agreement, to: (i) provide for a credit to the purchase price of the Second Tranche Debentures and the Second Tranche Warrants in the amount of the March 28th Debenture, (ii) update the wire instructions set forth on Exhibit C, (iii) modify the time period within which such Call Option may be exercised, and (iv) provide for the reimbursement by the Company of certain legal fees paid by the Investors on behalf of the Company in connection with the negotiation and settlement of claims of the Company’s current creditors and current employees.

NOW THEREFORE, the parties hereby agree as follows:

AGREEMENT

1. Section 1.4(b) of the Purchase Agreement is hereby amended and rested in its entirety to read as follows:

“(b) Second Closing. The purchase and sale of the Second Tranche Debentures and issuance of the Second Tranche Warrants shall take place via exchange of electronic or facsimile signature pages thereto (with originals to be mailed as soon as practicable thereafter) on a date to be agreed between the parties, upon the satisfactory settlement or agreement among the Company and its principal corporate creditors; provided, however, that either Thomas F. Bartman or John W. Bartman may waive the occurrence thereof on behalf of each of the Investors (the “Second Closing”). The Company shall keep the Investors reasonably informed regarding all such settlement discussions and agreements with any of its principal corporate creditors. At the Second Closing, the Company shall deliver to the Investors the Second Tranche Debentures and the Second Tranche Warrants against payment of the purchase price therefor (such purchase price to be reduced by the amount of the March 28th Debenture following which the March 28th Debenture shall be cancelled) by check payable to the Company or by wire transfer to the bank and account designated by the Company on Exhibit C attached hereto.”

2. Section 1.4(c) of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:

“(c) Third Closing. The Investors may, at their sole option, lend to the Company up to an additional Four Hundred and One Thousand One Hundred and Fifty Seven Dollars ($401,157.00) on the same terms and conditions as the Warrants and Debentures issued at the Initial Closing and Second Closing (the “Call Option”), provided, that the Investors shall notify the Company in writing of their intent to exercise their Call Option (the “Call Option Exercise Notice”) no later than ten (10) calendar days following (i) the tenth (10th) calendar day following delivery to the Investors of documentation that establishes, to the reasonable satisfaction of the Investors, entry into one or more license agreements that will generate in the aggregate Three Hundred Thousand Dollars ($300,000.00) in revenues, or (ii) the sixth month anniversary of the date of this Agreement, whichever occurs earlier, and stating the aggregate amount of funds to be lent to the Company. The purchase and sale of the Third Tranche Debentures and issuance of the Third Tranche Warrants shall take place via exchange of electronic or facsimile signature pages thereto (with originals to be mailed as soon as practicable thereafter) no later than five (5) business days following the Company’s receipt of the Call Option Exercise Notice (the “Third Closing”). At the Third Closing, the Company shall deliver to the Investors the Third Tranche Debentures and the Third Tranche Warrants against payment of the purchase price therefor by check payable to the Company or by wire transfer to the bank and account designated by the Company on Exhibit C attached hereto.”

1

3. Section 7.7 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:

“7.7 Fees and Expenses. The Company and Investors shall bear their own expenses in connection with the transactions contemplated by this Agreement; provided that Company shall (i) pay Investors’ legal expenses up to a maximum of $15,000.00 in connection with the transactions contemplated by this Agreement; and (ii) reimburse the Investors for all legal fees and expenses incurred in connection with the negotiation and settlement of certain claims between the Company and its current creditors and certain current employees within ten (10) calendar days of payment, which may be made from time to time, by the Investors to Manatt, Phelps & Phillips, LLP of such fees and expenses with the Company satisfying its reimbursement obligation to the Investors by issuing to the Investors Debentures in the aggregate principal amount of such fees and expenses as well as the requisite corresponding number of Warrants all on the same terms and conditions as those issued at the Initial Closing. For example, in the event that the legal fees and expenses amounted to $30,000.00, the Company would be required to issue to the Investors Debentures with an aggregate face value of $30,000.00 accompanied by Warrants evidencing the right to purchase in the aggregate 800,010 shares of Common Stock, and the purchase price of such Warrant Shares would be $0.10 per share, $0.20 per share for 266,670 and $0.30 per share for 266,670, of the Warrant Shares.”

4. Second Closing Wire Instructions. Exhibit C to the Purchase Agreement is hereby amended and restated in its entirety in the form attached to this Agreement.

5. Investors’ Representatives.

5.1 By entering into and executing this Agreement, the Investors hereby irrevocably make, constitute and appoint John A. Bartman and Thomas F. Bartman, and each of them, (an “Investor Representative”) acting individually, and not jointly, as each Investor’s agent, effective as of the date first written above, and each Investor appoints each of the Investor Representatives, acting individually, and not jointly, as such Investor’s true and lawful attorney in fact and agent, for such Investor and in such Investor’s name, place and stead and for all purposes necessary or desirable in order for the Investor Representatives to take all actions contemplated by this Agreement and the Purchase Agreement, for each such Investor’s use and benefit as set forth hereinafter. The death, incapacity, dissolution, liquidation, insolvency or bankruptcy of any Investor shall not terminate the authority and agency of the Investor Representatives. The power-of-attorney granted in this Section is coupled with an interest and is irrevocable and shall survive any transfer of any Investor’s interest in the Purchase Agreement, as amended, the Debentures or the Warrants.

5.2 Except as set forth herein, the Investor Representatives are hereby granted the authority (i) to act on each Investor’s behalf in connection with the Purchase Agreement, as amended, the Debentures and the Warrants and (ii) to sign, acknowledge, and deliver on each Investor’s behalf to the Company, or its successor in interest, all documents relating to any and all matters, of every type and nature whatsoever, in connection with the Purchase Agreement, as amended, the Debentures and the Warrants. Nothing contained herein shall be deemed to grant to the Investor Representatives any power to exercise any conversion rights granted to the Investors in the Debentures or any power to exercise any Warrants.

5.3 Each Investors Representative may, but is not required to, in his sole and absolute discretion, insert a legend on the Debentures and Warrants stating, in effect, that the Debentures and Warrants are subject to this Section.

6. Investor Anti-Dilution Protection. If and when the Company issues shares of Common Stock (or any security or instrument convertible into or exercisable for shares of Common Stock) to any person in connection with the settlement or other resolution of an obligation that existed, or an arrangement or transaction that occurred, prior to the Initial Closing (each a “Settlement Issuance”), the Company shall be required to simultaneously issue to the Investors in the aggregate (with each Investor receiving the percentage of the aggregate Anti-Dilution Issuance (as defined below) set forth on Appendix 1 attached hereto), without the payment of any additional consideration by the Investors, that number of shares of Common Stock necessary to maintain the Investors percentage ownership of the Common Stock at 36.5% on a fully diluted basis (each a “Anti-Dilution Issuance”), which calculation shall be performed as follows:

2

y = (.365a + .365b - x)/.635

y = The number of shares of Common Stock to be issued in the Anti-Dilution Issuance.

a = The total number of shares of Common Stock of the Company issued and outstanding on a fully diluted basis immediately prior to the Settlement Issuance.

b = The number of shares of Common Stock to be issued in the Settlement Issuance.

x = The total number of shares of Common Stock held by the Investors immediately prior to the Settlement Issuance.

An example of the manner in which calculations will be made under this Section 6 is attached hereto as Appendix 2.

7. General Provisions.

7.1 Applicable Law. This Agreement shall be governed by the internal laws (and not the law of conflicts) of the State of New York.

7.2 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

7.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

7.4 Notices. Unless otherwise expressly provided, any notice required or permitted under this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by telegram or fax, or five (5) days after deposit with the United States Postal Service, by certified or registered mail, with postage prepaid, addressed to the party to be notified at such party’s address as set forth below, or on the signature page, or as subsequently modified by written notice:

The Company:

Airbee Wireless, Inc.

9400 Key West Avenue

Rockville, Maryland 20850

Attention: Eugene Sharer, President

Facsimile: (301) 517-1861

3

with copies to:

Stradling Yocca Carlson & Rauth

1600 Newport Center Drive Suite 1600

Newport Beach, California 92660

Attention: Shivbir S. Grewal, Esq.

Facsimile: (949) 725-4100

and

Allen & Associates LLC

12400 Wilshire Blvd Suite 1080

Los Angeles, California 90025

Facsimile: 310 371-7272

Investors:

John W. Bartman and Thomas F. Bartman

11777 San Vicente Blvd Suite 600

Los Angeles, California 90049

Facsimile: 310 826-8477

with copies to:

Samuel W. Halper, Esq.

10866 Wilshire Blvd., Suite 400

Los Angeles, CA 90024

Facsimile: 424 901-8399

and

Allen & Associates LLC

12400 Wilshire Blvd Suite 1080

Los Angeles, California 90025

Facsimile: 310 371-7272

4

7.5 Attorney’s Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of the Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

7.6 Amendments and Waivers. Any term of this Agreement may be amended or waived and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Investors.

7.7 Entire Agreement. This Agreement, and the documents referred to herein constitute the entire agreement among the parties hereto pertaining to the subject matter hereof, and no party shall be liable or bound to any party in any manner by any warranties, representations, or covenants except as specifically set forth herein.

5

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 to Debenture and Warrant Purchase Agreement on April 15, 2008, and effective of the date first written above.

“THE COMPANY”

AIRBEE WIRELESS, INC., a

Delaware corporation

By: /s/ E. Eugene Sharer

Name: E. Eugene Sharer

Title: President

“INVESTORS”:

BARTFAM, a California limited partnership By: /s/ Thomas F. Bartman
Name: Thomas F. Bartman
Title: General Partner	John W. Bartman
Thomas F. Bartman, Managing Trustee of The William S. Bartman Marital Trust	/s/ John W. Bartman
/s/ Thomas F. Bartman
	David A. Bartman
Cecile Citron Bartman, Trustee of the Cecile Citron Bartman Trust	/s/ David A. Bartman
/s/ Cecile Citron Bartman, Trustee
	Michael T. Bartman
Judith A. Fiskin, Trustee of the Judith A. Fiskin Trust dated April 16, 1996 /s/ Judith A. Fiskin, Trustee	/s/ Michael T. Bartman

	% of Each Anti-Dilution
Investor Name	Issuance
BARTFAM, a California Limited Partnership		33.33	%
The William S. Bartman Marital Trust		16.67	%
Cecile Citron Bartman, Trustee of the Cecile Citron Bartman Trust dated September 26, 200		1       16.67	%
John W. Bartman		10.00	%
David A. Bartman		6.67	%
Michael T. Bartman		6.67	%
Judith A. Fiskin, Trustee of the Judith A. Fiskin Trust dated April 16, 1996		10.00	%
TOTAL		100.00	%

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APPENDIX 1

APPENDIX 2

EXAMPLE OF ANTIDILUTION ISSUANCE CALCULATION PURSUANT TO SECTION 6

Fully Diluted Issued & Outstanding Shares Immediately Prior to Settlement Issuance (a)	Number of Settlement Issuance Shares (b)		Total Number of Shares Held By Investors on As Converted Basis Immediately Prior to Settlement Issuance (x)		Investors % of Fully Diluted Issued & Outstanding Shares on As Converted Basis Immediately Prior to Settlement Issuance
189,040,507		10,000,000		69,000,000		36.50	%
Effectuating Settlement Issuance and Anti-Dilution Issuance:
Fully Diluted Issued & Outstanding Shares Immediately Subsequent to Settlement Issuance (a+b)	Number of Anti-Dilution Issuance Shares (y)		Total Number of Shares Held By Investors on As Converted Basis Immediately Subsequent to Anti-Dilution Issuance (x+y)		Investors % of Fully Diluted Issued & Outstanding Shares on As Converted Basis Immediately Subsequent to Settlement & Anti-Dilution Issuance
199,040,507		5,747,693		74,747,693		36.50	%

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EX-4.5

Promissory Note and Settlement Agreement

Date	April 15, 2008
Amount	$ 700,000
Interest Rate	8.5% simple interest, paid monthly
Term	24 months due April 14, 2010
Borrower	Airbee Wireless, Inc., a Delaware corporation
	9400 Key West Avenue
	Rockville, Maryland 20850
Lender	Catherine Zimmer
	1255 Victoria Avenue
	Victoria, BC V8S 4P3
	CANADA
	Fax: 250-370-9598
	105 Chelsea Circle
	Palm Desert, CA 92260
	Fax: 760-674-0907

1. Promise to Pay

Borrower promises to pay Lender the principal sum of $700,000 with simple interest at the yearly rate of 8.5% on the unpaid balance as specified below.

2. Interest Payment and Due Date

Borrower will pay interest on the first calendar day of each month during the term of this Promissory Note (the “Note”). Interest for the first month shall be payable in cash upon execution.

Interest for the second through the seventh month of the Note shall be payable either in cash or in shares of Borrower’s stock at Borrower’s sole option.

During months two through seven of the term of the note, Borrower shall endeavor to pay at least Three Thousand Dollars ($3,000) of the monthly interest in cash. If Borrower elects to pay the monthly interest in common stock of the Borrower, the number of shares issued in payment of the monthly interest then due will be determined based upon the volume weighted average price of the common stock of the Borrower during the ten (10) trading days prior to the last trading day of the calendar month for which the interest is due with a ten percent (10%) discount applied thereto.

Beginning in month eight of the term of the Note, the monthly interest will be paid in cash or stock, at the sole discretion of the Lender, employing the same formula as employed in months two through seven.

3. Conversion

Lender shall have the option of converting up to two hundred thousand dollars ($200,000) of the principal amount of this Note into common stock of Borrower. Such conversion at the election of Lender shall be at four and four tenths cents ($0.044) per share and shall convert into no more than four million five hundred forty five thousand four hundred fifty five (4,545,455) shares. The Lender may convert at anytime giving the Borrower fifteen (15) days notice of such conversion. When the Borrower is given notice of payment of the principal of the Note, either at the end of the Term of the Note or any Prepayment thereof, the Lender shall have fifteen (15) days to give notice to the Borrower of converting such payment in shares.

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4. Warrants

As an inducement for making this Note, Borrower shall modify all existing and outstanding warrants to purchase 2,866,667 shares of common stock of Borrower currently held by Lender or Henry Zimmer, by reducing the strike price of each warrants from $0.40 per share to $0.17 per share, and extending the termination date of all such warrants to December 31, 2009. The warrants are as listed in Exhibit B and are attached hereto or purposes of reference.

5. Cancellation of Previous Notes

This Note supersedes, cancels, replaces, and marks “PAID” to all prior loans between the Borrower and Henry Zimmer, Catherine Zimmer their heirs and assigns, which were typified as “Bridge Notes” and embodied in the form of a Term Sheet, incorporated for purposes of reference as “Exhibit A” aggregating to a total principal amount of Six Hundred Thousand Dollars ($600,000). With the cancelation of the previous Bridge Notes, the Lender will return to the Borrower three million two hundred thousand (3,200,000) shares issued in connection with the Bridge Notes.

6. Prepayment

Borrower may prepay all or any part of the principal without penalty. Borrower will give a thirty (30) days notice to Lender of its intention to prepay the Note, whether in whole or in part that exceeds Two Hundred Thousand Dollars ($200,000) of the principal of the Note.

7. Mutual Release

As a further material inducement to the both the Borrower and the Lender to enter into this Note, the Borrower, Lender and Henry Zimmer hereby irrevocably and unconditionally release, acquit and forever mutually discharge each other from any and all claims, actions, charges, complaints, causes of action, rights, damages (including all attorneys’ fees and costs), demands, debts, or accountings of any nature whatsoever, known or unknown, suspected or unsuspected, whether statutory or common law, which either may have against the other based on any actions or omissions which occurred prior to the date this Note is signed.

The Borrower, the Lender and Henry Zimmer further understand and agree that as a condition of this Note, each agrees to waive all rights under Section 1542 of the Civil Code of the State of California, to the extent it is applicable, which reads as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MAY HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

Notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and complete release and discharge of the Borrower, the Lender and Henry Zimmer, each party expressly acknowledges that this Note is intended to include, and does include in its effect, without limitation all claims which you do not know or suspect to exist in your favor against one another at the time of execution hereof, and that this Note agreed upon expressly contemplates the extinguishment of all such claims.

8. Entire Agreement

This is the entire Agreement between the parties. It replaces and supersedes any and all oral and written Agreements between the Borrower, Lender and Henry Zimmer.

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9. Successors and Assignees

This Agreement binds and benefits the heirs, successors and assignees of the parties.

10. Notices

All notices must be in writing. A notice may be delivered to a party at the address that follows a party’s signature or to a new address that a party designates in writing. A notice may be delivered in person, by facsimile, certified mail or overnight courier.

11. Governing Law

This Agreement will be governed by and construed in accordance with the laws of the state of California.

12. Modification

This Agreement may be modified only by a writing signed by the party against whom such modification is sought to be enforced.

13. Waiver

If either party waives any term or provision of this Agreement at any time, that waiver will be effective only for the specific instance and specific purpose for which the waiver was given. If either party fails to exercise or delays exercising any of its rights or remedies under this Agreement, that party retains the right to enforce that term or provision at a later time.

14. Severability

If any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, any invalidity or unenforceability will affect only that provision and will not make any other provision of this agreement invalid or unenforceable and such provision shall be modified, amended or limited only to the extent necessary to render it valid and enforceable.

15. Disputes

If a dispute arises, the parties will try in good faith to settle it through mediation conducted by a mediator to be mutually selected. The parties will share the costs of the mediator equally. Each party will cooperate fully and fairly with the mediator and will attempt to reach a mutually satisfactory compromise to the dispute. If the dispute is not resolved within 30 days after it is referred to the mediator, it will be arbitrated by an arbitrator to be mutually selected. Judgment on the arbitration award may be entered in any court that has jurisdiction over the matter. Costs of arbitration, including lawyers’ fees, will be allocated by the arbitrator.

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BORROWER	LENDER
Airbee Wireless, Inc., a Delaware corporation 9400 Key West Avenue Rockville, MD 20850 Ph: (301) 517-1860 Dated: April 15, 2008	Catherine Zimmer, an Individual 105 Chelsea Circle Palm Desert, CA 92260 Ph: (760) 647-0907/(205) 370-9598 Dated: April 15, 2008
/s/ E. Eugene Sharer	/s/ Catherine Zimmer
E. Eugene Sharer, President	Catherine Zimmer
	AGREEMENT AND CONSENT
	Henry Zimmer, an Individual 105 Chelsea Circle Palm Desert, CA 92260 Dated: April 15, 2008
	/s/ Henry Zimmer
	Henry Zimmer

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EXHIBIT A

Signed Term Sheet and related documentation to be attached

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EXHIBIT B

Schedule of Warrants

Warrant date	Warrant holder
May 19, 2006 August 29, 2006 October 10, 2006 October 10, 2006 December 28, 2006 December 28, 2006 January 2, 2007 January 2, 2007 January 30, 2007 January 30, 2007	Henry Zimmer Catherine Zimmer Henry Zimmer Catherine Zimmer Henry Zimmer Catherine Zimmer Henry Zimmer Catherine Zimmer Henry Zimmer Catherine Zimmer

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EX-10.1

SETTLEMENT AGREEMENT

This SETTLEMENT AGREEMENT (the “Agreement”) is made and entered into as of this 15th day of April, 2008, by and between Richard P. Sommerfeld, Jr. (“Sommerfeld”), on the one hand, and Airbee Wireless, Inc. (“Airbee”), (each a Party and, together, the “Parties”).

RECITALS:

WHEREAS, Sommerfeld filed an action against Airbee and others in the Circuit Court for Montgomery County, Maryland (the “Court”) entitled Richard P. Sommerfeld, Jr. v. Airbee Wireless, Inc., Civil Case No. 265130-V, in which Airbee filed certain counterclaims against Sommerfeld (the “Action”);

WHEREAS, on June 8, 2007, the Court issued an Order that, inter alia, required Airbee to pay Sommerfeld $183,316.64 in accrued but unpaid salary, together with pre-judgment interest on the accrued unpaid salary, calculated from the date each payment was due until the date final judgment was entered in the case;

WHEREAS, on July 1, 2007, the Parties entered into a Settlement Agreement (the “July 2007 Agreement”) pursuant to which they resolved their differences without either party admitting any liability or wrongdoing;

WHEREAS, Airbee did not perform its obligations under the July 2007 Agreement, and accordingly judgment was entered against Airbee on September 26, 2007 in the amount of $700,000, plus interest and costs of the Action, such that as of April 26, 2008, the amount owed on the judgment will be $740,833.33, plus costs, with interest continuing to accrue until the judgment is paid in full;

WHEREAS, Airbee has not paid any portion of the judgment entered against it;

WHEREAS, as of September 26, 2007, the value of the Court’s June 8, 2007 award to Sommerfeld had increased to $211,657.90 due to accretion of prejudgment interest;

WHEREAS, as of February 29, 2008, Sommerfeld had incurred legal fees, court costs and other expenses in the amount of $148,737.21 in the Action and in enforcing his judgment, such that the total amount owed to Sommerfeld as of March 1, 2008 (excluding legal fees incurred after February 29, 2008 was $912,078.47); and

WHEREAS, the Parties wish to fully and finally resolve all disputes existing between them.

NOW, THEREFORE, in consideration of the premises and mutual promises herein, the Parties do hereby agree as follows:

1. Entire Agreement Between the Parties: It is specifically understood and agreed that this Agreement sets forth and constitutes the sole and entire agreement between the Parties, any and all prior and/or contemporaneous agreements, discussions or understandings between the parties pertaining to the subject matter hereof (including, but not limited to, the July 2007 Agreement) are superseded by this Agreement.

2. Payments by Airbee to Sommerfeld. In full and final settlement of all disputes between the parties, whether known or unknown, and in exchange for the full release set forth in Paragraph 4 below, the Parties agree that Airbee shall pay Sommerfeld a total of Eight Hundred Fifteen Thousand Dollars ($815,000) in the following manner:

a. On or before April 18, 2008, Airbee shall pay to Sommerfeld the sum of Three Hundred Fifty Thousand Dollars ($350,000) via wire transfer to the Savit & Szymkowicz, LLP Trust Account, Account #70035617, ABA #055002707, located within the Sun Trust Bank Wildwood Branch, 10245 Old Georgetown Road, Bethesda, MD 20814, Telephone (301) 493-8635.The amount paid shall be deemed to include payment of $183,316.64 in salary per the June 8, 2007 court order and $148,737.21 in legal fees and expenses.

b. On or before April 15, 2008, Airbee shall issue to Sommerfeld a subordinated secured convertible debenture, substantially in the form attached hereto as Exhibit A, in the principal amount of Four Hundred Sixty Five Thousand Dollars ($465,000) (the “Subordinated Debenture”). The shares of Airbee’s common stock, par value $0.00004 per share (the “Common Stock”), issuable upon conversion of the Subordinated Debenture are referred to herein as the “Conversion Shares.”

c. On or before April 15, 2008, Airbee shall issue to Sommerfeld certain warrants (the “Warrants”), substantially in the form attached hereto as Exhibit B, each evidencing the right to purchase an aggregate of 2,841,667 shares of Common Stock. The purchase price of the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”) shall be as follows: 1,550,000 of the Warrant Shares shall have a purchase price of $0.10 per share; 775,000 of the Warrant Shares shall have a purchase price of $0.20 per share; and 516,667 of the Warrant Shares shall have a purchase price of $0.30 per share.

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3. Termination of the Action Upon Payment Under Paragraph 2. Immediately upon receipt of the payment described in Paragraph 2(a) above, and the execution of all documents necessary to convert the outstanding judgment balance to the Subordinated Debenture described in Paragraph 2(b) above, Sommerfeld shall:

a. File a Line, in the form attached hereto as Exhibit C, asking the Court to mark the judgment entered in the Action “Paid and Satisfied;”

b. Consent to a Joint Motion for Return of Seized Property to be filed by Airbee at its expense, in the form attached hereto as Exhibit D, asking the Court to direct, at the earliest possible time, the Montgomery County Sheriff (the “Sheriff”) to permit Airbee to retrieve (at Airbee’s expense) all property seized by the Sheriff from Airbee’s offices in Rockville, Maryland on February 27, 2008;

c. After the Court has entered the relief requested by the Line referenced in Paragraph 3(a) and the Consent Motion referenced in Paragraph 3(b), file a Stipulation of Dismissal With Prejudice, in the form attached hereto as Exhibit E, dismissing the Action.

d. File a termination statement (or equivalent instrument) with respect to each financing statement, judgment notice or other instrument filed with any filing office (including, without limitation the Maryland Secretary of State, the Delaware Secretary of State, the California Secretary of State, and any county filing office) where any such financing statement, judgment notice or other instrument was filed or recorded by Sommerfeld with respect to the judgment obtained by him against Airbee, in each case terminating such filing, all such filings to be at Airbee’s expense.

e. Enter into an Intercreditor and Subordination Agreement (the “Intercreditor Agreement’), substantially in the form attached hereto as Exhibit F, with Airbee and the Senior Creditors (as defined therein).

4. Full and Final Releases. Upon execution of this Agreement, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by each of the Parties:

a. Sommerfeld, for himself, and for his heirs, attorneys, legal representatives, agents, estates, successors in interest and assigns, hereby irrevocably and unconditionally releases, acquits and forever discharges Airbee and its parent companies, subsidiaries, predecessors, successors, attorneys, legal representatives, insurance carriers, officers, directors, employees, servants, shareholders, agents, assigns, affiliates and investors from any and all claims whatsoever (including, but not limited to, causes of action, suits, charges, debts, dues, liabilities, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, torts, controversies, agreements, promises, variances, trespasses, damages, requests for costs or attorney’s fees, judgments, obligations, extends, executions, actions, rights, claims and demands) in law, admiralty, equity or federal or state statute of whatever kind and character, which Sommerfeld ever had, now has, or may have (including any claim for damages occurring at any time after the date of this Agreement because of alleged continuing effects of any alleged acts or omissions involving the Parties which occurred on or before the date of this Agreement), whether such claims are known or unknown, by reason of, or arising out of, touching upon, or concerning his employment with Airbee or termination therefrom, and any and all other matters of whatever kind, nature or description, including, but not limited to, any and all claims for breach of contract or implied contract, breach of the covenant of good faith and fair dealing, inducement of breach, wrongful or unlawful discharge or demotion, violation of public policy, retaliation, intentional or negligent infliction of emotional distress, intentional or negligent misrepresentation, tortious denial of contract, interference with proprietary interests, failure to pay wages, bonuses, benefits, vacation pay, severance pay or other compensation of any sort, defamation, unlawful efforts to prevent employment, violation of constitutional rights, discrimination or harassment on the basis of race, color, sex, sexual orientation, national origin, religion, age (including but not limited to claims arising under the Age Discrimination in Employment Act and Older Worker Benefit Protection Act, 29 U.S.C. § 621, et seq.), disability, medical condition or marital status, and/or violation of any statutes, rules, regulations or ordinances, whether federal, state or local, including, but not limited to, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, and actions pursuant to any federal, state or local statute, rule, regulation or ordinance.

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b. Airbee, for itself, and for its heirs, attorneys, legal representatives, officers, directors, employees, servants, shareholders, agents, assigns, affiliates and investors, hereby irrevocably and unconditionally releases, acquits and forever discharges Sommerfeld and his predecessors, attorneys, legal representatives, estates, successors in interest, insurance carriers, employees, servants, agents, assigns and affiliates from any and all claims whatsoever (including, but not limited to, causes of action, suits, charges, debts, dues, liabilities, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, torts, controversies, agreements, promises, variances, trespasses, damages, requests for costs or attorney’s fees, judgments, obligations, extends, executions, actions, rights, claims and demands) in law, admiralty, equity or federal or state statute of whatever kind and character, which Airbee ever had, now has, or may have (including any claim for damages occurring at any time after the date of this Agreement because of alleged continuing effects of any alleged acts or omissions involving the Parties which occurred on or before the date of this Agreement), whether such claims are known or unknown.

5. Grant of Security Interest Airbee hereby grants to Sommerfeld a subordinated security interest in and to: (a) all goods of Airbee, including, without limitation, machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles of every kind and description, now or hereafter owned by Airbee or in which Airbee may have or may hereafter acquire any interest, and all replacements, additions, accessions, substitutions and proceeds thereof, arising from the sale or disposition thereof, and where applicable, the proceeds of insurance and of any tort claims involving any of the foregoing; (b) all inventory of Airbee, including, but not limited to, all goods, wares, merchandise, parts, supplies, finished products, other tangible personal property, including such inventory as is temporarily out of Airbee’s custody or possession and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing; (c) all contract rights and general intangibles of Airbee, including, without limitation, goodwill, trademarks, trade styles, trade names, leasehold interests, partnership. limited liability company, or joint venture interests, patents and patent applications, copyrights, deposit accounts whether now owned or hereafter created; (d) all documents, warehouse receipts, instruments and chattel paper of Airbee whether now owned or hereafter created; (e) all accounts and other receivables, instruments or other forms of obligations and rights to payment of Airbee (herein collectively referred to as “Accounts”), together with the proceeds thereof, all goods represented by such Accounts and all such goods that may be returned by Airbee’s customers, and all proceeds of any insurance thereon, and all guarantees, securities and liens which Airbee may hold for the payment of any such Accounts including, without limitation, all rights of stoppage in transit, replevin and reclamation and as an unpaid vendor and/or lienor, all of which Airbee represents and warrants will be bona fide and existing obligations of its respective customers, arising out of the sale of goods by Airbee in the ordinary course of business; (f) to the extent assignable, all of Airbee’s rights under all present and future authorizations, permits, licenses and franchises issued or granted in connection with the operations of any of its facilities; (g) all products and proceeds (including, without limitation, insurance proceeds) from the above-described pledged property (collectively referred to as the “Pledged Property”) in order to secure the repayment of the Subordinated Debenture issued to Sommerfeld pursuant to Section 2(b) of this Agreement (such secured obligations, the “Obligations”).

a. Subordination of Obligations and Liens Under Intercreditor Agreement. The Obligations and all liens, security interests and other encumbrances of any nature (including judgment liens) granted to Sommerfeld hereunder or otherwise held at any time by Sommerfeld in and to the Pledged Property are subordinated in right and priority of payment to the Senior Debt (as defined in and provided for pursuant to the Intercreditor Agreement. Notwithstanding any provision in this Agreement, the Subordinated Debenture or any other document to the contrary, all of Sommerfeld’s rights and remedies with respect to the Obligations or any other indebtedness owing by Airbee to Sommerfeld are subject in all respect to the terms of the Intercreditor Agreement. In the event of any conflict or inconsistency between the terms of this Agreement, the Subordinated Debenture or any other agreement or law with respect to issues governed by the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control to the full extent permitted by applicable law.

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b. Rights; Interests; Etc. So long as no default shall have occurred and be continuing under the Subordinated Debenture (an “Event of Default”):

(i) Airbee shall be entitled to exercise any and all rights pertaining to the Pledged Property or any part thereof for any purpose not inconsistent with the terms hereof; and

(ii) Airbee shall be entitled to receive and retain any and all payments paid or made in respect of the Pledged Property.

c. Default and Remedies. If an Event of Default occurs, then in each such case Sommerfeld may declare the Obligations to be due and payable immediately, by a notice in writing to Airbee, and upon any such declaration, the Obligations shall become immediately due and payable; provided, however, that the Obligations shall become immediately due and payable without the requirement of the giving of any notice upon an Event of Default occurring as the result of Airbee being dissolved or liquidated (or any judgment, order or decree therefor shall be entered); or if a creditors’ committee shall have been appointed for the business of Airbee; or if Airbee shall have made a general assignment for the benefit of creditors or shall have been adjudicated bankrupt and if not an adjudication based on a filing by Airbee, it shall not have been dismissed within thirty (30) days, or shall have filed a voluntary petition in bankruptcy or for reorganization or to effect a plan or arrangement with creditors or shall fail to pay its debts generally as such debts become due in the ordinary course of business (except as contested in good faith and for which adequate reserves are made in such party’s financial statements); or shall file an answer to a creditor’s petition or other petition filed against it, admitting the material allegations thereof for an adjudication in bankruptcy or for reorganization; or shall have applied for or permitted the appointment of a receiver or trustee or custodian for any of its property or assets; or such receiver, trustee or custodian shall have been appointed for any of its property or assets (otherwise than upon application or consent of Airbee) and shall not have been removed within thirty (30) days; or if an order shall be entered approving any petition for reorganization of Airbee and shall not have been reversed or dismissed within thirty (30) days; or if Airbee shall take any action (corporate or other) authorizing or in furtherance any of the actions described above in this subsection.

d. Method of Realizing Upon the Pledged Property; Other Remedies. Upon the occurrence of an Event of Default, in addition to any rights and remedies available at law or in equity, the following provisions shall govern Sommerfeld’s right to realize upon the Pledged Property:

(i) Any item of the Pledged Property may be sold for cash or other value in any number of lots at brokers board, public auction or private sale and may be sold without demand, advertisement or notice, except that Sommerfeld shall give Airbee ten (10) days’ prior written notice of the time and place or of the time after which a private sale may be made (the “Sale Notice”), which notice period is hereby agreed to be commercially reasonable. At any sale or sales of the Pledged Property, Airbee may bid for and purchase the whole or any part of the Pledged Property and, upon compliance with the terms of such sale, may hold, exploit and dispose of the same without further accountability to Sommerfeld. Airbee will execute and deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers, certificates, and affidavits and supply or cause to be supplied such further information and take such further action as Sommerfeld reasonably shall require in connection with any such sale.

(ii) Any cash being held by Sommerfeld as Pledged Property and all cash proceeds received by Sommerfeld in respect of, sale of, collection from, or other realization upon all or any part of the Pledged Property shall be applied as follows:

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(A) to the payment of the Senior Debt pursuant to the terms of the Intercreditor Agreement;

(B)	to the payment of all amounts due Sommerfeld for the expenses reimbursable to it hereunder or owed to it pursuant to Section 5.f. hereof;
(C)	to the payment of the Obligations then due and unpaid; and

(D) the balance, if any, to the person or persons entitled thereto, including, without limitation, Airbee.

(iii) In addition to all of the rights and remedies which Sommerfeld may have pursuant to this Agreement, Sommerfeld shall have all of the rights and remedies provided by law, including, without limitation, those under the Uniform Commercial Code.

(iv) Sommerfeld is specifically entitled to file, in his sole discretion, UCC-1 statements reflecting this Agreement in any jurisdiction in which Airbee is incorporated, the costs of preparing and filing such statements to be paid by Airbee.

e. Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to Airbee or the property of Airbee, subject to the Intercreditor Agreement, Sommerfeld (irrespective of whether the Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether Sommerfeld shall have made any demand on Airbee for the payment of the Obligations), subject to the rights of prior security holders, shall be entitled and empowered, by intervention in such proceeding or otherwise:

(i) to file and prove a claim for the whole amount of the Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of Sommerfeld (including any claim for the reasonable legal fees and expenses and other expenses paid or incurred by Sommerfeld permitted hereunder and of Sommerfeld allowed in such judicial proceeding), and

(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by Sommerfeld to make such payments to Sommerfeld and, in the event that Sommerfeld shall consent to the making of such payments directed to Sommerfeld, to pay to Sommerfeld any amounts for expenses due it hereunder.

f. Expenses. In the event of an Event of Default, and subject to the Intercreditor Agreement, including, but in no way limited to, Section 7.2(j)(b)(B) of the Intercreditor Agreement, Airbee will pay to Sommerfeld the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel, which Sommerfeld may incur in connection with: (i) the custody or preservation of, or the sale, collection from, or other realization upon, any of the Pledged Property; (ii) the exercise or enforcement of any of the rights of Sommerfeld hereunder or (iii) the failure by Airbee to perform or observe any of the provisions hereof.

g. Continuing Security Interest. This Section 5 shall create a continuing security interest in the Pledged Property and shall: (i) remain in full force and effect until payment in full of the Obligations or conversion of the Subordinated Debenture; and (ii) be binding upon Airbee and its successors and heirs and (iii) inure to the benefit of Sommerfeld. Upon the payment or satisfaction in full of the Obligations or conversion of the Convertible Debenture, Airbee shall be entitled to the return, at its expense, of such of the Pledged Property as shall not have been sold in accordance with Section 5.d. hereof or otherwise applied pursuant to the terms hereof.

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6. Representations and Warranties of Airbee. Airbee hereby represents and warrants to Sommerfeld that:

a. Authorization. Airbee has the requisite corporate power and authority to execute this Agreement and perform its obligations hereunder. All corporate action on the part of Airbee necessary for the authorization, execution and delivery of this Agreement, the performance of Airbee hereunder and the authorization, issuance and delivery of the Subordinated Debenture and the Warrants has been taken or will be taken, and each of this Agreement, the Subordinated Debenture and Warrants when executed and delivered by Airbee, shall constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors’ rights generally and (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

b.

Valid Issuance of the Securities. The Subordinated Debenture and Warrants that are being issued to Sommerfeld hereunder, when issued and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued and fully paid and non-assessable, will be free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws and will be issued in compliance with applicable state and federal securities laws. The Conversion Shares and the Warrant Shares to be issued and delivered upon conversion of the Subordinated Debenture or upon exercise of the Warrants, in accordance with the terms thereof for the consideration expressed therein, will be duly and validly issued, fully paid and non-assessable, will be free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws and will be issued in compliance with applicable state and federal securities laws. Airbee (i) has duly and validly authorized and reserved for issuance shares of Common Stock, which is a number sufficient for the Conversion Shares and the Warrant Shares and (ii) at all times from and after the date hereof shall have a sufficient number of shares of Common Stock duly and validly authorized and reserved for issuance to satisfy the issuance of the Conversion Shares and Warrant Shares in full. The Debentures, Warrants, Conversion Shares and Warrant Shares are collectively referred to herein as the “Securities.”

c.

Private Placement. Assuming the accuracy of Sommerfeld’s representations and warranties set forth in Section 7 hereof, no registration under the Securities Act of 1933, as amended (the “Securities Act”), is required for the offer and issuance of the Securities by Airbee to Sommerfeld as contemplated hereby.

d. No Conflicts. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which Airbee is a party or by which Airbee or any of its respective properties is bound, or of the articles of incorporation or by-laws of Airbee or any law, order, rule or regulation, judgment, writ or decree applicable to Airbee of any court or of any government, regulatory body or administrative agency or other governmental body having jurisdiction.

e. Absence of Litigation. There is no action, suit, claim, investigation, inquiry or proceeding pending against Airbee before any court or administrative agency or otherwise, which if determined adversely to Airbee would prevent the consummation of the transactions contemplated hereby.

f. No Assignment or Subrogation of Rights. Airbee has not assigned or subrogated any of said rights, claims and causes of action referenced in Section 4(b) above, or authorized any other person or entity to assert such a claim or claims on its behalf, and agrees to indemnify and hold Sommerfeld harmless against and from any and all liability, damages, awards, costs and expenses of any kind whatsoever, by reason of, or arising out of, touching upon, or concerning the assignment of said rights, claims and/or causes of action.

7. Representations and Warranties of Sommerfeld. Sommerfeld hereby represents and warrants to Airbee that:

a. Authorization. Sommerfeld has full power and authority to enter into this Agreement. Each of the Agreement, the Debentures and Warrants, when executed and delivered by Sommerfeld, will constitute valid and legally binding obligations of Sommerfeld, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally and (b) as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies.

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b. Purchase Entirely for Own Account. This Agreement is made with Sommerfeld in reliance upon Sommerfeld’s representation to Airbee, which by Sommerfeld’s execution of this Agreement, Sommerfeld hereby confirms, that the Subordinated Debenture and Warrants to be acquired by Sommerfeld hereunder, and the Conversion Shares and Warrant Shares to be issued to Sommerfeld upon conversion of the Subordinated Debenture or upon exercise of the Warrants, will be acquired for investment for Sommerfeld’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Sommerfeld has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Sommerfeld further represents that Sommerfeld does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Subordinated Debenture.

c. Disclosure of Information. Sommerfeld believes he has received all the information he considers necessary or appropriate for deciding whether to acquire the Subordinated Debenture and Warrants. Sommerfeld further represents that he has had an opportunity to ask questions and receive answers from Airbee regarding the terms and conditions of the offering of the Subordinated Debenture and Warrants and the business, properties, prospects and financial condition of Airbee.

d. Investment Experience; Independent Counsel. Sommerfeld acknowledges that he can bear the economic risk of his investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Subordinated Debenture and Warrants. Sommerfeld is represented by his own legal counsel in connection with this Agreement, the related agreements and the transactions contemplated hereby, and has not been represented by, or been provided with any legal advice of Airbee’s counsel in connection herewith.

e. Accredited Investor. Sommerfeld is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act.

f. Restricted Securities. Sommerfeld understands that the Securities have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Sommerfeld’s representations as expressed herein. Sommerfeld understands that the Securities are “restricted securities” under applicable United States federal and state securities laws and that, pursuant to these laws, Sommerfeld must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Sommerfeld acknowledges that Airbee has no obligation to register or qualify the Securities for resale. Sommerfeld further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the applicable Securities, and on requirements relating to Airbee which are outside of Sommerfeld’s control, and which Airbee is under no obligation and may not be able to satisfy.

g. Further Limitations on Disposition. Without in any way limiting the representations set forth above, Sommerfeld further agrees not to make any disposition of all or any portion of the Securities, unless and until the transferee has agreed in writing for the benefit of Airbee to be bound by this Section 7, provided and to the extent this Section 7(g) is then applicable, and:

(i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(ii) Sommerfeld shall have notified Airbee of the proposed disposition and shall have furnished Airbee with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by Airbee, Sommerfeld shall have furnished Airbee with an opinion of counsel, reasonably satisfactory to Airbee that such disposition will not require registration of such shares under the Securities Act.

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h. Legends. Sommerfeld understands that the Securities may bear one or all of the following legends:

(i) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. HOLDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

(ii) Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended.

f. No Assignment or Subrogation of Rights. Sommerfeld has not assigned or subrogated any of said rights, claims and causes of action referenced in Section4(a) above, or authorized any other person or entity to assert such a claim or claims on his behalf, and agrees to indemnify and hold Airbee harmless against and from any and all liability, damages, awards, costs and expenses of any kind whatsoever, by reason of, or arising out of, touching upon, or concerning the assignment of said rights, claims and/or causes of action.

8. Tax Matters.

a. Notwithstanding anything in this Agreement to the contrary, the Parties acknowledge and agree to treat the payments described in Section 2 of this Agreement as follows for federal and state income tax purposes: (i) $183,316.64 of the payment as salary; (ii) $17,946.15 of the payment as interest; and (iii) $148,737.21 as legal fees and expenses.

b. The portion of the payments treated as salary (i) shall be deemed paid from the cash portion of the payment described in Section 2(a), and (ii) will be reported for federal and state income and employment tax purposes as compensation income to Sommerfeld on Form W-2 and VA-2. By execution of this Agreement, Sommerfeld hereby authorizes Airbee to deduct and withhold from the salary portion of the payment all legally required payroll withholdings and deductions upon such amount, including federal and state income taxes and the employee’s share of FICA and Medicare. Sommerfeld acknowledges and agrees that he will only receive the net amount of such salary, after withholding, on the applicable payment date but that the gross amount of such salary shall be deemed paid to Sommerfeld pursuant to this Agreement.

c. Sommerfeld shall provide Airbee with all information required from time to time to perform tax reporting on IRS Form W-2, VA-2 and/or 1099 on or prior to the applicable payment date.

d. Sommerfeld shall indemnify and hold harmless Airbee, and its officers, directors, former officers, former directors, legal predecessors, successors, assigns, and those who at any time purport for any reason to be acting in association with them or on their behalf, from and against any liability paid or incurred as a result of any federal, state or local income and employment reporting and withholding tax obligations related in any way to the payments made to Sommerfeld pursuant to Section 2 of this Agreement, including, without limitation, interest, penalties, attorneys’ fees and other out of pocket costs.

9. Notices of Certain Events. Airbee shall promptly provided written notice to Sommerfeld, if either Airbee’s Chief Executive Officer or Chief Financial Officer obtains actual knowledge (without any duty of diligence or investigation being implied) of the occurrence or existence of any of the following: (i) an increase in the principal amount of, acceleration of the obligations under or extension of the maturity date of, the Senior Debt (as that term is defined in the Intercreditor Agreement; (ii) an event of default under the Senior Debt for which the Senior Creditors (as that term is defined in the Intercreditor Agreement) deliver a notice of default to Airbee; and (iii) any waivers, forbearances or other agreements with the Senior Creditors relating to any events of default as to which the Senior Creditors have previously provided Airbee with written notice of.

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10. Miscellaneous. Within 10 days following execution of this agreement, Airbee will, at its expense, file a consent motion, substantially in the form attached hereto as Exhibit G, asking the Court to place under seal the copy of Airbee’s answers to Sommerfeld’s interrogatories in aid of execution that was filed with Airbee’s January 2, 2008 motion to compel discovery.

11.	Severability.	If at any time after the full execution of this Agreement, any provision of this Agreement shall be held by any court or other forum of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force and effect. The illegality or unenforceability of such provision, however, shall have no effect upon, and shall not impair the enforceability of, any other provision of this Agreement.
12.	Choice of Law. The terms of this agreement and all rights and obligations of the parties hereto, including its enforcement, shall be interpreted and governed by the laws of the State of Maryland, without regard to conflicts of law principles.
13.	Forum.	Any action brought pursuant to this agreement, or in any way related thereto, shall be brought in a court of competent jurisdiction in the State of Maryland. The Parties expressly consent to personal jurisdiction in the State of Maryland in any such proceedings.

14. Attorney Fees to Prevailing Party in Dispute Regarding Agreement. In the event that a dispute arises between the Parties under this Agreement, the prevailing Party shall be entitled, in addition to any other relief obtained, to recover his/its costs, including reasonable attorney’s fees.

15.	Modification of Agreement.No provision of this agreement may be modified, altered, waived or discharged unless such modification, alteration, waiver or discharge is agreed to in writing and signed by the parties hereto. No waiver by either party hereto of any condition or provision of this agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
16.	Headings. The headings of the sections contained in this agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this agreement.
17.	Continuing Obligations.Each Party acknowledges that the terms of this Agreement shall survive the execution of the Agreement and the provision of payments specified herein.
18.	Counterparts.	This Agreement may be executed simultaneously in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. For purposes of this Agreement, facsimile signatures are valid and have the same force and effect as original signatures.

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19.    Acknowledgments. The Parties acknowledge that:

a. No promises or inducements have been made to them except as expressly set forth in this agreement;

b. No Party is relying upon any promises, inducements, representations or statements not expressly set forth in this agreement;

c. All Parties have had the opportunity adequately to review and consider the terms and provisions of this Agreement;

d. Each Party has consulted with an attorney of his or its own choosing prior to executing this Agreement;

e. All Parties have carefully read this Agreement in its entirety and fully understand the significance of all of the terms and provisions;

f. The Agreement was drafted by attorneys for both Parties, and thus language contained herein shall not be construed against either Party; and

g. All Parties are signing this Agreement voluntarily and of it or their own free will and each assents to all the terms and conditions contained herein.

20. No Admission of Liability. This Agreement does not constitute an admission of any kind by Airbee or Sommerfeld. The Parties hereto desire to resolve their disputes in an amicable fashion and have entered into this Agreement with the desire to forever resolve between them those matters described in this Agreement.

21. Time Is of the Essence. Time is of the essence with respect to the obligations set forth in this agreement.

22.	Notices. Any notice required to be sent under this Agreement shall be given in writing, as follows:
	To Airbee:
	Airbee Wireless, Inc. 9400 Key West Avenue Rockville, Maryland 20850

Attention: E. Eugene Sharer, President

Facsimile: (301) 57-1861

with a copy to:

Stradling Yocca Carlson & Rauth

1600 Newport Center Drive, Suite 1600

Newport Beach, California 92660

Attention: Shivbir S. Grewal, Esq.

Telephone: (949) 725-4123

Facsimile: (949) 725-4100

To Sommerfeld:

Richard P. Sommerfeld, Jr.

115 S. Oak Street

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Falls Church, Virginia 22046

with a copy to:

Savit & Szymkowicz, LLP

7315 Wisconsin Avenue

Suite 601N

Bethesda, Maryland 20814

Attention: Diana M. Savit, Esq.

Telephone: (301) 951-9191

Facsimile: (301) 718-7788

The contact information provided herein for each party shall be presumed accurate unless new or different information is provided in writing to the other party at the address provided in this paragraph.

The notice provision in this paragraph will not, however, apply to any court filings, which will be served in accordance with the applicable Rules of Civil Procedure.

[Signature Page Follows]

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IN WITNESS WHEREOF, intending to be legally bound, the Parties have executed this settlement agreement.

RICHARD P. SOMMERFELD, JR.

By: /s/Richard P. Sommerfeld, Jr.

Name: Richard P. Sommerfeld, Jr.

AIRBEE WIRELESS, INC.

By: /s/ E. Eugene Sharer

Name: E. Eugene Sharer

Title: President

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