Read: Happy New Year

= Karim,

<= /o:p>

For the board positions, I have= everything from a half a percent to 2% stipend. With the lower ones,= they are more substantial companies (Morgan Franklin for example which is = a $70M SI). And while Morgan Franklin’s stock percentage is clo= se to half a percent, they pay me around $36K/year) for board fees as well.= Similarly with IPIX and Object Video, they paid quite a bit although= my stock options were lower. In both these cases I haven’t inv= ested at all in the company. Half a percent for a company as small as= you would be, in my view pretty low. In your case, it wouldn’t= be good (or right) to take fees as you just don’t have them.

I am contemplating a board position with an IQT comp= any called “SpotterRF” and we are wrestling right now between 1= and 1.5% and a very small stipend for board meetings plus some expenses.

On the raise. I want to give you a blind= ed out copy of the type deals we do with our angel group (www.bluventureinvestors.com). We ha= ve done $1M deals and we are very active. We have done three deals in= the last quarter of 2010 and have two outstanding negotiations going on ri= ght now.

However, the $10M is rich for our bl= ood, particularly with where you are right now. As you can see in the= deals I’m attaching, these are existing companies with seven figures= of revenue and are growing at about 100% per year. I think I MIGHT b= e able to sell a valuation of perhaps $5M.

In= order to get this into the right frame though, there is a bunch of work yo= u’re going to have to get done, i.e.:

Chris tied up or as tied up as possible;

Building a business plan and road map;

Probably solidifying your CTO (and perhaps oth= er staff);

Doubt anyone would invest at this = valuation without lots of dd and substantiation.

I’m in a board meeting but will call you later this afternoon.

Jim

<= span style=3D'font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F= 497D'>

Jim Hunt, Managing Pa= rtner

MITA= Group, Inc.

703/338-6414 - cell

<= i>703/903-0201 - fax

From: Karim Hijazi Unveillance Email [m= ailto:khijazi@unveillance.com]
Sent: Thursday, January 06, 2011 = 12:16 PM
To: James Hunt
Cc: Jeff Gray
Subject: Moving forward

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Hash: SHA1

Jim:

I= ?d like to set up a call right away to discuss, with Jeff Gray , who
I h= ave hired as a consultant to assist me in working through issues of
corp= orate structure, governance, fundraising, etc.

A few comments = from me before we get on a call:

We?re in sync when it comes t= o pulling the fed line of business and
the data (Chris Davis) under one = roof.   Both as a matter of managing
the business, and for fun= draising purposes, we need to do that.

As it relates to your i= nvolvement, first let me say that I value your
knowledge and experience,= and believe that if we can structure
something that works for all parti= es concerned you would be a great
asset to the Company.   To t= hat end, I suggest we separate the issues
you outlined, and address them= individually.

1.       Board of Direc= tors.   My plan is to expand the board
concurrently with the c= lose of a round of financing. If it is a
small/seed round, I antic= ipate a three member board. In addition to
myself, one seat will o= bviously go to the investor (or lead investor
if there is more than one)= , and my current thinking is that the third
seat will be someone outside= of the company.   If you invest (see
below) you would obvious= ly have a seat on the board. If you don?t,
you?re the best candida= te I have for the third seat on the board.

2.    = ;   Board Compensation.   I?m working with Jeff and my = legal
counsel on incentive shares for employees, board members, & st= rategic
partners/vendors.   My guess is that board comp. will = be in line with
the other company you?re working with ? around .5% per y= ear.

3.       Your Potential Investmen= t in Unveillance.    My current
thinking is that we do a = small seed round right now, get our ducks in
a row, and then try to clos= e a Series A round in early 2^nd quarter of
this year if needed. &n= bsp; For Series A, the EG round is a great
valuation comp for Unve= illance.   For seed stage investors like
yourself (I have at l= east one other who I think might move quickly) my
preference would be to= do a convertible debt round, with a 20%
discount.   &nbs= p; I think we can justify a pre-money valuation of at least
$10M today, = and do better than that in the Series A round.   If you
buy in= to that, $500K buys a 5% stake in the Company ? $400K with the
discount.=

4.       Your Role as Advisor to Unve= illance Federal Division.   I
like this idea, and long term I = would like to talk about your
involvement in the Company as president of= that division of
Unveillance.   Your role in the near term wo= uld be to take the lead in
developing the business plan for the fed divi= sion, and we would try to
fund that initiative with the proceeds of the = Series A round.

I think the first thing we have to discuss is = your potential
investment. If that is something you want to pursue= now, let?s work
through terms and get that done. If not, let?s ta= ble and move on with
the rest.

I look forward to talking wi= th you!

- --
All the best,

Karim Hijazi
CEO | Presiden= t
Unveillance
O. (404) 585-7487
M. (561) 542-5704
www.unveillance.com
khijazi@unveillance.com

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