Exhibit 10.1

SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of February
___, 2014, between Be Active Holdings Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and permitted assigns, a “Purchaser” and collectively,
the “Purchasers”).

PREAMBLE
 
WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement (the “Offering”).
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
 
ARTICLE I.
DEFINITIONS
 
1.1           Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
 
“Accredited Investor” shall have the meaning ascribed to it in Section 3.2(c).

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.18.

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

“Additional Shares” shall have the meaning ascribed to such term in Section
4.14.

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

“Beneficial Ownership Limitation” shall have the meaning ascribed to such term
in Section 4.24.
 
“Board of Directors” means the board of directors of the Company.
 
“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Buy-In” shall have the meaning ascribed to such term in Section 4.1(g).

“Certificate of Designation” means the Certificate of Designation of
Preferences, Rights and Limitations of Series C Convertible Preferred Stock to
be filed prior to the Closing by the Company with the Secretary of State of
Delaware, in the form of Exhibit A attached hereto.
 
“Closing” means the Closing of the purchase and sale of the Securities pursuant
to Section 2.1 or 2.4.

“Closing Date” means the Closing Date and is the Trading Day on which all of the
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay
the Subscription Amount at such Closing  and (ii) the Company’s obligations to
deliver the Securities to be issued and sold at such Closing, in each case, have
been satisfied or waived, but in no event later than the third Trading Day
following the date hereof in the case of the Closing.

 
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“Commission” means the United States Securities and Exchange Commission.
 
“Common Stock” means the common stock of the Company, $0.0001 par value, and any
other class of securities into which such securities may hereafter be
reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
“Company Counsel” means Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd
Floor, New York, NY 10006, Attn: Harvey Kesner, Esq., facsimile: (212) 930-9725.
 
“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.
 
“Escrow Agent” means G&M.
 
“Escrow Agreement” means the escrow agreement entered into at or about the date
hereof, by and among the Company, the Escrow Agent and the Purchasers pursuant
to which the Purchasers shall deposit Subscription Amounts with the Escrow Agent
to be applied to the transactions contemplated hereunder.  The form of Escrow
Agreement is annexed hereto as Exhibit C.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) shares of Common Stock and options
to officers, employees, or directors of the Company issued pursuant to plans
that have been approved by a majority of the stockholders and a majority of the
independent members of the board of directors of the Company or in existence as
such plans are constituted on the date of this Agreement and in an aggregate
amount not to exceed 10% of the number of shares of Common Stock outstanding on
the Closing Date, (b) securities upon the exercise or exchange of or conversion
of any Securities issued hereunder (subject to adjustment for forward and
reverse stock splits and the like that occur after the date hereof) and/or other
securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such
securities and any term thereof have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the issue
price, exercise price, exchange price or conversion price of such securities and
which securities and the principal terms thereof are described in the SEC
Reports filed not later than five (5) days before the Closing Date, (c) full or
partial consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or assets of a
corporation or other entity which holders of such securities or debt are not at
any time granted any registration rights but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities, (d)
securities in connection with strategic license agreements and other partnering
arrangements so long as such issuances are not primarily for the purpose of
raising capital and which holders of such securities or debt are not at any time
granted registration rights, (e) securities issued or issuable pursuant to this
Agreement, upon conversion of the Preferred Stock or upon exercise of the or the
Warrants, including, without limitation, Section 4.15, or upon exercise of
conversion of any such securities, (f) Common Stock or the issuances or grants
of options to purchase Common Stock to consultants and service providers
approved by a majority in amount of the Shares sold in the Offering, including
the Preferred Stock, voting as a group, held as of the date of approval, (g)
shares Series D Preferred Stock or any shares of Common Stock issuable upon
conversion of Series D Preferred Stock, and (h) securities issued or issuable as
disclosed on Schedule 1.1 to this Agreement.
 
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

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

 
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“FDA Product” shall have the meaning ascribed to such term in Section 3.1(nn).

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

“Final Closing Date” shall mean the Closing Date.

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

“G&M” means Grushko & Mittman, P.C., with offices located at 515 Rockaway
Avenue, Valley Stream, New York 11581, Fax: (212) 697-3575.
 
“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

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

“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).
 
“Liens” means a lien, charge pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.

“Listing Default” shall have the meaning ascribed to such term in Section 4.9.

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

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.21.

“Money Laundering Laws” shall have the meaning ascribed to such term in Section
3.1(r).

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

“Offering” shall have the meaning ascribed to such term in the Preamble.

“Participation Maximum” shall have the meaning ascribed to such term in Section
4.12(a).

“Permitted Indebtedness” means capital lease obligations and purchase money
indebtedness of up to $200,000, in the aggregate, incurred in connection with
the acquisition of capital assets and lease obligations with respect to newly
acquired or leased assets.

“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established in accordance with GAAP, (b) Liens imposed by law which were
incurred in the ordinary course of the business of the Company or any of its
Subsidiaries, such as suppliers’, vendors’, carriers’, warehousemen’s and
mechanics’ Liens, statutory workmen’s, repairmen’s and landlords’ Liens, and
other similar Liens arising in the ordinary course of the business of the
Company or any of its Subsidiaries, and which (x) do not individually or in the
aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of the
Company and its consolidated Subsidiaries or (y) are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the property or
asset subject to such Lien, (c) Liens incurred prior to the Closing Date in
connection with Permitted Indebtedness under clause (x) thereunder, (d) Liens
incurred in connection with Permitted Indebtedness under clause (y) thereunder,
provided that such Liens are not secured by assets of the Company or its
Subsidiaries other than the assets so acquired or leased, (e) non-exclusive
licenses granted by the Company in respect of its intellectual property, and (f)
Liens disclosed on Schedule 3.1(n) to this Agreement.

 
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“Per Share Purchase Price” equals $0.03, subject to appropriate adjustment for
reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Preferred Stock” means the shares of the Company’s Series C Convertible
Preferred Stock issued or issuable hereunder having the rights, preferences and
privileges set forth in the Certificate of Designation, in the form of Exhibit A
hereto

“Pre-Notice” shall have the meaning ascribed to such term in Section 4.12(b).
 
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

“Pro-Rata Portion” shall have the meaning ascribed to such term in Section
4.12(e).

“Protection Period” shall have the meaning ascribed to such term in Section
4.14.

“Public Information Failure” shall have the meaning ascribed to such term in
Section 4.2(b).
 
“Public Information Failure Payments” shall have the meaning ascribed to such
term in Section 4.2(b).
 
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

“Registration Expenses” shall have the meaning ascribed to such term in Section
4.23.
 
“Removal Date” means the date that all of the issued Shares and Warrant Shares
have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without
the requirement for the Company to be in compliance with the current public
information requirements under Rule 144 and without volume or manner-of-sale
restrictions.
 
“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

“Required Minimum” shall have the meaning ascribed to such term in Section 4.8.
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
 
“SEC Reports” shall mean all reports, schedules, forms, statements and other
documents filed by the Company under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, since January 9, 2013,
including the exhibits thereto and documents incorporated by reference therein.

“Securities” means the Shares, the Preferred Stock, the Shares of Common Stock
into which the Preferred Stock are convertible, the Warrants and the Warrant
Shares.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 
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“Securities Laws” means the securities laws of the United States or any state
thereof and the rules and regulations promulgated thereunder.
 
“Selling Expenses” shall have the meaning ascribed to such term in Section 4.23.

“Series D Preferred Stock” shall mean the Series D Convertible Preferred Stock
of the Company, which will be designated and authorized for issuance by the
Company’s Board of Directors and issued to one or more member’s of the Company’s
management immediately prior to or after the Closing and which will possess
certain majority voting rights or other similar preferences as shall be
determined by the Company’s Board of Directors.

“Share Dilution Adjustment” shall have the meaning ascribed to such term in
Section 4.14.

“Share Dilutive Issuance” shall have the meaning ascribed to such term in
Section 4.14.

“Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement, including but not limited to Reset Shares, Preferred
Shares issued or issuable upon conversion of the Preferred Stock and Warrant
Shares issued or issuable upon exercise of the Warrants provided that any such
share of Common Stock shall not constitute a Share after such share has been
irrevocably sold pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 without further restrictions or
conditions to transfer pursuant to Rule 144, and provided further that
Additional Shares and Additional Warrant Shares shall constitute Shares only as
provided in Section 4.14.
 
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). 

“Stock Option Plan” means the Stock Option Plan of the Company in effect as the
date of this Agreement, the principal terms of which have been disclosed in the
SEC Reports.
 
“Subscription Amount” means, as to each Purchaser at the Closing, the aggregate
amount to be paid for Shares or Preferred Stock and Warrants purchased hereunder
at the Closing as specified below such Purchaser’s name on the signature page of
this Agreement and next to the heading “Subscription Amount,” in United States
dollars and in immediately available funds.

 “Subsequent Financing” shall have the meaning ascribed to such term in Section
4.12(a).
 
“Subsequent Financing Notice” shall have the meaning ascribed to such term in
Section 4.12(b).
 
“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable and with regard to future events, also include any
direct or indirect subsidiary of the Company formed or acquired after the date
hereof.

“Termination Date” shall have the meaning ascribed to such term in Section
2.1(a).
 
“Trading Day” means a day on which the principal Trading Market is open for
trading; provided, that in the event that the Common Stock is not listed or
quoted for trading on a Trading Market on the date in question, then Trading Day
shall mean a Business Day.
 
“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, or the OTC Bulletin Board (or any
successors to any of the foregoing).
 
“Transaction Documents” means this Agreement, the Certificate of Designation,
the Warrants, the Escrow Agreement, all exhibits and schedules thereto and
hereto and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

 
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“Transfer Agent” means Equity Stock Transfer, and any successor transfer agent
of the Company.
 
“Variable Rate Transaction” shall have the meaning ascribed to such term in
Section 4.20.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b)  if the Common Stock is not then listed or quoted for trading on a
Trading Market and if prices for the Common Stock are then reported on the OTC
Pink Marketplace maintained by OTC Markets Group Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent
closing price per share of the Common Stock so reported, or (c) in all other
cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Purchasers of a majority in
interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
 
“Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at any Closing in the form of Exhibit B attached hereto.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants, provided that any share of Common Stock issued upon exercise of the
Warrants shall not constitute an issued Warrant Share for purposes of this
Agreement after such share has been irrevocably sold pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144 without
further restrictions or conditions to transfer pursuant to Rule 144.
 
ARTICLE II.
PURCHASE AND SALE
 
2.1            Closing.  On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and each of the Purchasers, severally and not jointly, agrees to purchase Shares
and at the election of any Purchaser who would, as a result of purchase of
Shares become a beneficial owner of five (5%) percent or greater of the
outstanding Common Stock of the Company, one share of the Company’s Series C
Preferred Stock, $0.0001 per share, which is convertible into one (1) share of
Common Stock with rights and designations set forth in the Certificate of
Designation attached hereto as Exhibit A (the “Preferred Shares”) at a purchase
price of $0.03 per Share (“Purchase Price”)   and Warrants for an aggregate
purchase price of a [          ] (such purchase and sale being the “Closing”).
Certain Purchasers have the option of purchasing Preferred Stock by electing
such option on the signature page of this Agreement.  Prior to the Closing, each
Purchaser shall deliver to the Escrow Agent such Purchaser’s Closing
Subscription Amount as set forth on the signature page hereto executed by such
Purchaser by a wire transfer of immediately available funds, such amount to be
held in a non-interest-bearing escrow account, and the Company shall, on the
Closing Date, deliver to each Purchaser a certificate representing the number of
Shares or Preferred Stock and Warrants purchased by such Purchaser at the
Closing as determined pursuant to Section 2.2(a). The Company and each Purchaser
shall also deliver the other items set forth in Section 2.2 deliverable at the
Closing. Upon satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of G&M or such other
location as the parties shall mutually agree.  Notwithstanding anything herein
to the contrary, the Closing Date shall occur on or before February 16, 2014
(such outside date, “Termination Date”).  If the Closing is not held on or
before the Termination Date, the Escrow Agent shall cause (i) all subscription
documents executed by the Company or a Purchaser to be returned to the Company
or such Purchaser, as applicable, and (ii) each Subscription Amount to be
returned, without interest or deduction to the Purchaser who delivered such
Subscription Amount.

 
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2.2          Deliveries.
 
(a)           On or prior to the Closing Date, the Company shall deliver or
cause to be delivered to the Escrow Agent the following:
 
(i)           (x) this Agreement duly executed by the Company, and (y) the
Escrow Agreement duly executed by the Company;
 
(ii)          legal opinion of Company Counsel substantially in the form of
Exhibit C attached hereto;
 
(iii)         a certificate evidencing a number of Shares of Common Stock equal
to such Purchaser’s Closing Subscription Amount divided by the Per Share
Purchase Price registered in the name of such Purchaser;
 
(iv)          Warrants registered in the name of such Purchaser to purchase up
to a number of shares of Common Stock equal to one hundred percent (100%) of
such Purchaser’s Shares or Preferred Stock calculated pursuant to clause (iii)
above, with an initial exercise price of $0.03 per share, subject to adjustment
therein; and

(v)             The certificates evidencing the Preferred Stock, which must be
delivered within seven (7) days of Closing.

(b)          On or prior to the Closing Date, each Purchaser shall deliver or
cause to be delivered to the Escrow Agent the following:
 
(i)          this Agreement and the Escrow Agreement each duly executed by such
Purchaser; and
 
(ii)         such Purchaser’s Closing Subscription Amount by wire transfer to
the account specified in the Escrow Agreement.
  
2.3           Closing Conditions.
 
(a)           The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:
 
(i)          the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);
 
(ii)         all obligations, covenants and agreements of each Purchaser under
this Agreement required to be performed at or prior to the Closing Date shall
have been performed in all material respects;
 
(iii)      the delivery by each Purchaser of the items set forth in Section
2.2(b) of this Agreement;

(iv)           the Escrow Agent shall have received executed signature pages to
this Agreement and the Escrow Agreement from Purchasers showing an agreement to
purchase Shares or Preferred Stock and Warrants hereunder with an aggregate
purchase price of [          ] and the Escrow Agent shall have received an
aggregate of [          ] in corresponding Subscription Amounts from such
Purchasers in cash.

 
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(b)             The respective obligations of a Purchaser hereunder in
connection with the Closing, unless waived by such Purchaser, are subject to the
following conditions being met:
 
(i)           the accuracy in all material respects (determined without regard
to any materiality, Material Adverse Effect or other similar qualifiers therein)
when made and on the Closing Date of the representations and warranties of the
Company contained herein (unless as of a specific date therein in which case
they shall be accurate as of such date);
 
(ii)          all obligations, covenants and agreements of the Company under
this Agreement required to be performed at or prior to the Closing Date shall
have been performed;
 
(iii)         the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;
 
(iv)         there shall have been no Material Adverse Effect with respect to
the Company since the date hereof;

 
(v)
from the date hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s principal Trading Market
and, at any time from the date hereof prior to the Closing Date, trading in
securities generally as reported by Bloomberg L.P. shall not have been suspended
or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Closing; and

(vi)        the Escrow Agent shall have received executed signature pages to
this Agreement from Purchasers showing an agreement to purchase Shares or
Preferred Stock and Warrants hereunder with an aggregate purchase price of
[          ] and the Escrow Agent shall have received an aggregate of [         
] in corresponding Subscription Amounts from such Purchasers in cash.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1          Representations and Warranties of the Company. Except as set forth
in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or warranty made herein only to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to each Purchaser as of the Closing Date:
 
(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1(a). The Company owns, directly or
indirectly, a majority of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, other than Permitted Liens, subject to
restrictions under applicable laws, and all of the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.

 
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(b)           Organization and Qualification.  The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in:  (i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
 
(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.  The execution
and delivery of each of this Agreement and the other Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except:  (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other laws
of general application affecting enforcement of creditors’ rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

(d)           No Conflicts.  The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) by the Company, any
Subsidiary or, any third party  under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including Securities Laws), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not have or reasonably be expected
to result in a Material Adverse Effect.
 
(e)           Filings, Consents and Approvals.  Except as set forth on Schedule
3.1(e), the Company is not required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any
court or other provincial or foreign or domestic federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii)
the notice and/or application(s) to each applicable Trading Market for the
issuance and sale of the Securities and the listing of the Shares and Warrant
Shares for trading thereon in the time and manner required thereby, if any, all
of which, if any, shall have been effectuated prior to the Closing, and (iii)
the filing of a Form D with the Commission and such filings as are required to
be made under applicable Securities Laws (collectively, the “Required
Approvals”).

 
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(f)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens other than restrictions on transfer provided for in the
Transaction Documents and Liens resulting from the activities of any Purchaser.
The Company has reserved from its duly authorized capital stock the maximum
stated number of shares of Common Stock issuable pursuant to this Agreement and
the Warrants.

(g)           Capitalization.  The capitalization of the Company is as set forth
in Schedule 3.1(g). The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to
the exercise of employee stock options under the Stock Option Plans, the
issuance of shares of Common Stock to employees pursuant to the Stock Option
Plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the
Exchange Act.  No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as disclosed on Schedule
3.1(g), there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common
Stock, or material contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock or Common Stock Equivalents. Except as set forth on
Schedule 3.1(g), the issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. All of the outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable, have
been issued in material compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities.  No further
approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
 
(h)          Form 8-K; Financial Statements.  The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, since January 9, 2013 on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension.  As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.  The Form 8-K described in Section 4.4,
upon its filing, will comply in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
latest audited financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing.  Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP and are
subject to normal, immaterial, year end audit adjustments, and fairly present in
all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 
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(i)           Material Changes; Undisclosed Events, Liabilities or
Developments.  Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a
subsequent SEC Report filed not later than five Trading Days prior to the date
hereof or not later than five Trading Days prior to the applicable Closing Date
as of which this representation and warranty is being made and except as set
forth in Schedule 3.1(i): (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables, and accrued expenses incurred in the
ordinary course of business consistent with past practice, (B) transaction
expenses incurred in connection with the Transaction Documents, and (C)
liabilities not required to be reflected in the Company’s financial statements
pursuant to GAAP or disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option plans which issuances prior to the date of this Agreement
are described on Schedule 3.1(g). The Company does not have pending before the
Commission any request for confidential treatment of information. Except for the
issuance of the Securities contemplated by this Agreement and as set forth on
Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or
development has occurred or exists, or is reasonably expected to occur or exist,
with respect to the Company or its Subsidiaries or their respective businesses,
properties, operations, assets or financial condition, that would be required to
be disclosed by the Company under applicable Securities Laws at the time this
representation is made or deemed made that has not been publicly disclosed at
least one (1) Trading Day prior to the date that this representation is made.
 
(j)           Litigation.  Except as set forth on Schedule 3.1(j), there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) that
would, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect, nor to the knowledge of the Company is
there any reasonable basis for any such Action that would, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor, to the Company’s
knowledge, any director or officer thereof, is or has been the subject of any
Action involving a claim of violation of or liability under Securities Laws or a
claim of breach of fiduciary duty. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or, to the knowledge of the Company, any
current or former director or officer of the Company, nor to the knowledge of
the Company is there any reasonable basis for any of the foregoing. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

(k)           Labor Relations.  No labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company,
which could reasonably be expected to result in a Material Adverse Effect.  None
of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or such Subsidiary, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relationships with their employees are good.  To the knowledge of the Company,
no executive officer of the Company or any Subsidiary, is, or is now expected by
the Company to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, which could reasonably be expected to
result in a Material Adverse Effect and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.  The Company and its
Subsidiaries are in compliance with all applicable U.S. federal, state, local
and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 
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(l)           Compliance.  Neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any judgment, decree or order of any court, arbitrator or other
governmental authority or (iii) is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not have
or reasonably be expected to result in a Material Adverse Effect.
 
(m)          Regulatory Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as actually conducted and as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be
expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
 
(n)           Title to Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and,
except as set forth on Schedule 3.1(n), marketable title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Permitted
Liens.  Except as set forth on Schedule 3.1(n), any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance, except where the non-compliance would not
reasonably be expected to result in a Material Adverse Effect.

(o)         Intellectual Property.

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

1.  
the name of the Company, all fictional business names, trading names, registered
and unregistered trademarks, service marks, and applications (collectively,
“Marks'');

 
2.  
all patents, patent applications, and inventions and discoveries that may be
patentable (collectively, “Patents'');

 
3.  
all copyrights in both published works and unpublished works (collectively,
“Copyrights”);

 
4.  
all rights in mask works (collectively, “Rights in Mask Works''); and

 
5.  
all know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, and blue
prints (collectively, “Trade Secrets''); owned, used, or licensed by the Company
as licensee or licensor.

 
(ii)       Agreements.  Schedule 3.1(o) contains a complete and accurate list of
all contracts relating to the Intellectual Property Rights to which the Company
is a party or by which the Company is bound, except for any license implied by
the sale of a product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $10,000 under which the Company is
the licensee. There are no outstanding and, to Company’s knowledge, no
threatened disputes or disagreements with respect to any such agreement.

 
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(iii)
Know-How Necessary for the Business.  To the Company’s knowledge: the
Intellectual Property Rights are all those necessary for the operation of the
Company’s businesses as it is currently conducted or as represented, in writing,
to the Purchasers to be conducted. To the Company’s knowledge: the Company is
the owner of all right, title, and interest in and to each of the Intellectual
Property Rights, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right to use all
of the Intellectual Property Rights, subject in each case to Permitted
Liens.  To the Company’s knowledge, no employee of the Company has entered into
any contract that restricts or limits in any way the scope or type of work in
which the employee may be engaged or requires the employee to transfer, assign,
or disclose information concerning his work to anyone other than of the Company.

 
 
(iv)
Know-How Necessary for the Business.  Schedule 3.1(o) contains a complete and
accurate list of all Patents. The Company is the owner of all right, title and
interest in and to each of the Patents, free and clear of all Liens and other
adverse claims other than Permitted Liens.  All of the issued Patents are
currently in compliance with formal legal requirements (including payment of
filing, examination, and maintenance fees and proofs of working or use), are
valid and enforceable, and, except as set forth on Schedule 3.1(o), are not
subject to any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.  No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding.  To the
Company’s knowledge: (1) there is no potentially interfering patent or patent
application of any third party, and (2) no Patent is infringed or has been
challenged or threatened in any way. To the Company’s knowledge, none of the
products manufactured and sold, nor any process or know-how used, by the Company
infringes or is alleged to infringe any patent or other proprietary right of any
other Person.

 
 
(v)
Trademarks.  Schedule 3.1(o) contains a complete and accurate list and summary
description of all Marks. The Company is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all Liens and other
adverse claims other than Permitted Liens.  All Marks that have been registered
with the United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.  Except as set
forth in Schedule 3.1(o), no Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company’s knowledge, no such action is
threatened with respect to any of the Marks.  To the Company’s knowledge: (1)
there is no potentially interfering trademark or trademark application of any
third party, and (2) no Mark is infringed or has been challenged or threatened
in any way. To the Company’s knowledge, none of the Marks used by the Company
infringes or is alleged to infringe any trade name, trademark, or service mark
of any third party.

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

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

 
(p)           Insurance.  The Company and the Subsidiaries are not currently
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in
which the Company and the Subsidiaries are engaged.  Neither the Company nor any
Subsidiary believes that it will not be able to acquire insurance coverage as
may be necessary to continue its business.
 
(q)           Transactions With Affiliates and Employees.  Except as set forth
in the SEC Reports, none of the officers or directors of the Company or any
Subsidiary and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $100,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company except as disclosed on Schedule
3.1(g).
 
(r)         Money Laundering.  The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened, nor is there any reasonable basis for any of the
foregoing.
 
(s)           Certain Fees.  Except with respect to placement agency fees that
may be payable to Palladium Capital Advisors LLC, no brokerage, finder’s fees,
commissions or due diligence fees are or will be payable by the Company or any
Subsidiary to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents except as set forth on Schedule
3.1(s).  The Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section 3.1(s) that may be due in connection with the
transactions contemplated by the Transaction Documents.
 
(t)           Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.

 
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(u)           Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.
 
(v)           Registration Rights.   Except as set forth on Schedule 3.1(v),
other than each of the Purchasers, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company or any Subsidiary.
 
(w)          Listing and Maintenance Requirements.   The Common Stock is quoted
on the OTCQB under the symbol JALA.  The Company has not, since January 9, 2013,
received notice from any Trading Market on which the Common Stock is or has been
listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market.

(x)           Application of Takeover Protections.  The Company and the Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.
 
(y)           Disclosure.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information
that it believes constitutes or might constitute material, non-public
information.   The Company understands and confirms that the Purchasers will
rely on the foregoing representation in effecting transactions in securities of
the Company.  All of the disclosure furnished by or on behalf of the Company to
the Purchasers regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, taken as a whole is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.  For the avoidance of
doubt, information disclosed in one section of the Disclosure Schedule shall not
be deemed disclosed in any other section of the Disclosure Schedule unless there
is an explicit cross reference to such other section.  The Company acknowledges
and agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.

(z)           No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
nor, to the knowledge of the Company, any of its Affiliates, nor any Person
acting on its or, to the knowledge of the Company, their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities by the Company to be integrated with prior offerings by the Company
for purposes of (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 
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(aa)         Solvency.  Based on the consolidated financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the Subscription Amount: (i) the fair saleable value of the  assets
of the Company and its Subsidiaries taken as a whole exceeds the amount that
will be required to be paid on or in respect of the existing debts and other
liabilities (including known contingent liabilities) of the Company and its
Subsidiaries as they mature, (ii) the assets of the Company and its Subsidiaries
do not constitute unreasonably small capital to carry on its business as now
conducted and as proposed to be conducted including its capital needs taking
into account the particular capital requirements of the business conducted by
the Company and its Subsidiaries consolidated and projected capital requirements
and capital availability thereof, and (iii) the current cash flow of the Company
and its Subsidiaries together with the proceeds the Company would receive, were
they to liquidate all of their assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in respect of
their liabilities when such amounts are required to be paid.  The Company does
not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).  The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule 3.1(aa) sets forth as of the
date hereof all Liens and outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $200,000 (other than
trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s consolidated balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $200,000 due under leases required to
be capitalized in accordance with GAAP.  The Company is not in default with
respect to any Indebtedness.

(bb)        Tax Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all required
United States federal, state and local income and all foreign income and
franchise tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply.  There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no reasonable basis for any such claim.
 
(cc)         No General Solicitation.  Neither the Company nor, to the knowledge
of the Company, any person acting on behalf of the Company has offered or sold
any of the Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only to the
Purchasers and certain other “accredited investors” within the meaning of Rule
501 under the Securities Act.
 
(dd)        Foreign Corrupt Practices.  Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or other person
acting on behalf of the Company or any Subsidiary, has: (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the
Company or any Subsidiary (or made by any person acting on its behalf of which
the Company is aware) which is  in violation of law or (iv) violated in any
material respect any provision of FCPA.
 
(ee)         Accountants.  The Company’s accounting firm is set forth on
Schedule 3.1(ee) of the Disclosure Schedules.  To the knowledge and belief of
the Company, such accounting firm is registered with the Public Company
Accounting Oversight Board, and shall express its opinion with respect to the
financial statements to be included in the Company’s Annual Report for the
fiscal year ending December 31, 2013.

 
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(ff)             No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents.

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

(hh)        Acknowledgment Regarding Purchaser’s Trading Activity.  Anything in
this Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.21 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers has been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities,
(iii) any Purchaser, and counter-parties in “derivative” transactions to which
any such Purchaser is a party, directly or indirectly, may presently have a
“short” position in the Common Stock and (iv) each Purchaser shall not be deemed
to have any affiliation with or control over any arm’s length counter-party in
any “derivative” transaction.  The Company further understands and acknowledges
that (y) one or more Purchasers may engage in hedging activities in accordance
with all applicable laws at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the
value of the Warrant Shares deliverable with respect to Securities are being
determined, and (z) such hedging activities (if any) could reduce the value of
the existing stockholders' equity interests in the Company at and after the time
that the hedging activities are being conducted.  The Company acknowledges that
such aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.
  
(ii)           Regulation M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

(jj)           Stock Option Plans.  Except as set forth on Schedule 3.1(jj), as
of the date hereof, no stock options have been granted, nor any commitments made
to grant stock options, under the Stock Option Plan, and neither the Company nor
any Subsidiary has ever had an option plan, other than the Stock Option
Plan.  The Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior to, or
otherwise knowingly coordinate the grant of stock options with, the release or
other public announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects.
 
(kk)         Office of Foreign Assets Control.  Neither the Company nor any
Subsidiary  nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”).

 
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(ll)             Reporting Company/Shell Company.  The Company is a
publicly-held company subject to reporting obligations pursuant to Section 13 of
the Exchange Act.  Pursuant to the provisions of the Exchange Act, except as set
forth on Schedule 3.1(ll), the Company has timely filed all reports and other
materials required to be filed by the Company thereunder with the SEC during the
preceding twelve months.  As of the Closing Date, the Company is not a “shell
company” as those terms are employed in Rule 144 under the Securities Act.  The
Company is a “former shell company”.  On January 15, 2013, the Company filed
initial “Form 10 Information”, which such information was amended on January 29,
2013, May 21, 2013 and June 18, 2013 and indicated its removal from “shell
company” status.

(mm)             Sarbanes-Oxley; Internal Accounting Controls.  The Company and
the Subsidiaries are in material compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the
Commission thereunder that are effective as of the date hereof and as of the
Closing Date.  The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
the Subsidiaries and designed such disclosure controls and procedures to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and
forms.  The Company’s certifying officers have evaluated the effectiveness of
the disclosure controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic report under
the Exchange Act (such date, the “Evaluation Date”).  The Company presented in
its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date.  Since the
Evaluation Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act) of the Company
and its Subsidiaries that have materially affected, or is reasonably likely to
materially affect, the  internal control over financial reporting of the Company
and its Subsidiaries.

(nn)             FDA.  Except as set forth on Schedule 3.1(nn), as to each
product subject to the jurisdiction of the U.S. Food and Drug Administration
(“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the
regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested,
distributed, sold, and/or marketed by the Company or any of its Subsidiaries
(each such product, a “FDA Product”), such FDA Product is being manufactured,
packaged, labeled, tested, distributed, sold and/or marketed by the Company in
compliance with all applicable requirements under FDCA and similar laws,
rules and regulations relating to registration, investigational use, premarket
clearance, licensure, or application approval, good manufacturing practices,
good laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not reasonably be expected to have a Material
Adverse Effect.  There is no pending, completed or, to the Company’s knowledge,
threatened, action (including any lawsuit, arbitration, or legal or
administrative or regulatory proceeding, charge, complaint, or investigation)
against the Company or any of its Subsidiaries, and none of the Company or any
of its Subsidiaries has received any notice, warning letter or other
communication from the FDA or any other governmental entity, which (i) contests
the premarket clearance, licensure, registration, or approval of, the uses of,
the distribution of, the manufacturing or packaging of, the testing of, the sale
of, or the labeling and promotion of any FDA Product, (ii) withdraws its
approval of, requests the recall, suspension, or seizure of, or withdraws or
orders the withdrawal of advertising or sales promotional materials relating to,
any FDA Product, (iii) imposes a clinical hold on any clinical investigation by
the Company or any of its Subsidiaries, (iv) enjoins production at any facility
of the Company or any of its Subsidiaries, (v) enters or proposes to enter into
a consent decree of permanent injunction with the Company or any of its
Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or
regulations by the Company or any of its Subsidiaries, and which, either
individually or in the aggregate, would have a Material Adverse Effect.   Except
as set forth on Schedule 3.1(nn), the properties, business and operations of the
Company have been and are being conducted in accordance with all applicable
laws, rules and regulations of the FDA, except for any such non-compliance that
would not reasonably be expected to have a Material Adverse Effect.  The Company
has not been informed by the FDA that the FDA will prohibit the marketing, sale,
license or use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any concern as to
approving or clearing for marketing any product being developed or proposed to
be developed by the Company.

 
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3.2          Representations and Warranties of the Purchasers.  Each Purchaser,
for itself and for no other Purchaser, hereby represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein):
 
(a)           Organization; Authority.  Such Purchaser is either an individual
or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full
right, corporate, partnership, limited liability company or similar power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the
part of such Purchaser.  Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
 
(b)           Understandings or Arrangements.  Such Purchaser understands that
the Securities are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the
Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state
securities laws).  Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.
 
(c)           Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and as of the date hereof it is, and on each date on which
it exercises any Warrants it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act.  Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. Such Purchaser has the
authority and is duly and legally qualified to purchase and own the Securities.
Such Purchaser is able to bear the risk of such investment for an indefinite
period and to afford a complete loss thereof. Such Purchaser has provided the
information in the Accredited Investor Questionnaire attached hereto as Exhibit
D (the “Investor Questionnaire”). The information set forth on the signature
pages hereto and the Investor Questionnaire regarding such Purchaser is true and
complete in all respects. Except as disclosed in the Investor Questionnaire,
such Purchaser has had no position, office or other material relationship within
the past three years with the Company or Persons (as defined below) known to
such Purchaser to be affiliates of the Company, and is not a member of the
Financial Industry Regulator-y Authority or an “associated person” (as such term
is defined under the FINRA Membership and Registration Rules Section 1011).

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

 
 
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(e)           Information on Company. Such Purchaser has been furnished with or
has had access to the EDGAR Website of the Commission to the Company’s filings
made with the Commission since January 9, 2013, including but not limited to the
Risk Factor section of the Company’s Annual Report on Form 10-K filed with the
Commission for the fiscal year ended December 31, 2012 (hereinafter referred to
collectively as the “Reports”).  Purchasers are not deemed to have any knowledge
of any information not included in the Reports unless such information is
delivered in the manner described in the next sentence.  In addition, such
Purchaser may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as such
Purchaser has requested, identified thereon as OTHER WRITTEN INFORMATION (such
other information is collectively, the “Other Written Information”), and
considered all factors such Purchaser deems material in deciding on the
advisability of investing in the Securities.  Such Purchaser was afforded (i)
the opportunity to ask such questions as such Purchaser deemed necessary of, and
to receive answers from, representatives of the Company concerning the merits
and risks of acquiring the Securities; (ii) the right of access to information
about the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable such Purchaser to
evaluate the Securities; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to acquiring the Securities.
 
(f)           Certain Transactions and Confidentiality.  Such Purchaser
understands and agrees that the Securities have not been registered under the
Securities Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under the
Securities Act, and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the Securities Act or any applicable
state securities laws or is exempt from such registration. Such Purchaser
understands and agrees that the Securities are being offered and sold to such
Purchaser in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and regulations and that the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.
 
(g)           Communication of Offer. Such Purchaser is not purchasing the
Securities as a result of any “general solicitation” or “general advertising,”
as such terms are defined in Regulation D, which includes, but is not limited
to, any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or on the
internet or broadcast over television, radio or the internet or presented at any
seminar or any other general solicitation or general advertisement.

          
           (h)           No Governmental Review. Such Purchaser understands that
no United States federal or state agency or any other governmental or state
agency has passed on or made recommendations or endorsement of the Securities or
the suitability of the investment in the Securities nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.

 
            (i)           No Conflicts. The execution, delivery and performance
of this Agreement and performance under the other Transaction Documents and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby or relating hereto or thereto do not and will not (i) result in a
violation of such Purchaser’s charter documents, bylaws or other organizational
documents, if applicable, (ii) conflict with nor constitute a default (or an
event which with notice or lapse of time or both would become a default) under
any agreement to which such Purchaser is a party, nor (iii) result in a
violation of any law, rule, or regulation, or any order, judgment or decree of
any court or governmental agency applicable to such Purchaser or its properties
(except for such conflicts, defaults and violations as would not, individually
or in the aggregate, have a material adverse effect on such Purchaser). Such
Purchaser is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or perform under the other Transaction Documents nor to purchase the
Securities in accordance with the terms hereof, provided that for purposes of
the representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

 
 
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         (j)           Certain Transactions and Confidentiality.  Other than
consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser, executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing as of the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such
Purchaser’s assets, the representation set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement.  Other
than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).  The
Purchaser will not engage in any net Short Sales until the six month anniversary
of the Closing Date. Notwithstanding the foregoing, for avoidance of doubt,
nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the availability of,
or securing of, available shares to borrow in order to effect Short Sales or
similar transactions after the Closing Date.

 
         (k)           Pre-Existing Relationships.  The Purchaser represents and
warrants that: (i) the Purchaser was contacted regarding the sale of the
Securities by the Company (or an authorized agent or representative thereof)
with whom the Purchaser had a prior substantial pre-existing relationship, the
Purchaser is not investing in the Offering in connection with or as a result of
any Registration Statement on Form S-1, filed with the SEC by the Company   and
(ii) no Securities were offered or sold to it by means of any form of general
solicitation or general advertising, and in connection therewith, the Purchaser
did not (A) receive or review any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or (B)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising; or (C) observe any
website or filing of the Company with the SEC in which any offering of
securities by the Company was described and as a result learned of any offering
of securities by the Company.

     (l)           Survival. The foregoing representations and warranties shall
survive the Closing Date.

 
The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on
the Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby.

 
ARTICLE IV.

 
OTHER AGREEMENTS OF THE PARTIES

 
4.1          Transfer Restrictions.
 
(a)           The Securities may only be disposed of in compliance with state
and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.  As a condition of such transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and the other
applicable Transaction Documents and shall have the rights and obligations of a
Purchaser under this Agreement.
 
(b)          The Purchasers agree to the imprinting, so long as is required by
this Section 4.1, of a legend on any of the Securities in the following form:
 
 
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[NEITHER] THIS SECURITY [NOR THE SECURITIES [FOR] WHICH THIS SECURITY IS
EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  TO THE EXTENT PERMITTED BY
APPLICABLE SECURITIES LAWS, THIS SECURITY [AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 
The Company acknowledges and agrees that, a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the other applicable Transaction Documents and, if required under the terms
of such arrangement, such Purchaser may transfer pledged or secured Securities
into the name of the pledgees or secured parties, in their respective capacities
as such.  Such a pledge or transfer would not be subject to approval of the
Company and no legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith.  Further, no notice shall be
required of such pledge.  At the appropriate Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities.

(c)           Certificates evidencing the Shares and Warrant Shares shall not
contain any legend (including the legend set forth in Section 4.1(b) hereof),
(i) following any sale of such Shares or Warrant Shares pursuant to Rule 144, or
(ii) if such Shares or Warrant Shares are eligible for sale under Rule 144,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such Shares and Warrant Shares
and without volume or manner-of-sale restrictions, or (iii) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission).  The Company shall cause its counsel to issue a legal opinion to
the Transfer Agent promptly for any Security after the Removal Date if required
by the Transfer Agent to effect the removal of the legend hereunder, provided
that the holder of such Securities has provided such documentation as may be
reasonably requested by counsel for the purposes of said opinion.  If all or any
portion of the Shares are included in, or a Warrant is exercised at a time when
there is, an effective registration statement to cover the resale of such Shares
and Warrant Shares (and the Purchaser provides the Company or the Company’s
counsel with any reasonable certifications requested by the Company with respect
to future sales of such Shares or Warrant Shares) or the Shares or Warrant
Shares may be sold under Rule 144 without the requirement for the Company to be
in compliance with the current public information and any other limitations or
requirements set forth in Rule 144, including, without limitation, volume or
manner-of-sale restrictions, or if a legend is not otherwise required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then
such Shares will be reissued without the legend and Warrant Shares shall be
issued free of all legends. The Company agrees that following the Removal Date
or at such time as such legend is no longer required under this Section 4.1(c),
it will, no later than seven Trading Days following the delivery by a Purchaser
to the Company or the Transfer Agent of a certificate representing Shares or
Warrant Shares, as the case may be, issued with a restrictive legend, together
with any reasonable certifications requested by the Company, the Company’s
counsel or the Transfer Agent (such seventh Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other legends.

 
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The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4. Certificates for Securities subject to legend removal hereunder shall
be transmitted by the Transfer Agent to the Purchaser by crediting the account
of the Purchaser’s prime broker with the Depository Trust Company System through
its Deposit or Withdrawal at Custodian system (“DWAC”) as directed by such
Purchaser if the Transfer Agent is then a participant in such system and either
(i) there is an effective registration statement permitting the resale of such
Securities by the Purchaser (and the Purchaser provides the Company or the
Company’s counsel with any requested certifications with respect to future sales
of such Securities) or (ii) the shares are eligible for resale by the Purchaser
without further volume limitations or manner-of-sale restrictions and may be
sold without the requirement for the Company to be in compliance with Rule
144(c)(1) of the Securities Act.

(d)           In addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, for each $1,000 of Shares or Warrant Shares (based on the greater
of the VWAP of the Common Stock on the date such Securities are submitted to the
Transfer Agent or the purchase price of such Shares and Warrant Shares)
delivered for removal of the restrictive legend and Preferred Stock delivered
for conversion into Shares, $10 per Trading Day (increasing to $20 per Trading
Day five (5) Trading Days after such damages have begun to accrue) for each
Trading Day following the Legend Removal Date or the date such Shares are to be
delivered pursuant to the Certificate of Designation until such Common Stock
certificate is delivered without a legend pursuant to Section 4.1(c) or such
Shares as required pursuant to the Certificate of Designation, as the case may
be. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for the Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and such Purchaser shall have the right
to pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief.

(e)         DWAC. In lieu of delivering physical certificates representing the
unlegended shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the unlegended shares by crediting the
account of Purchaser’s prime broker with the Depository Trust Company through
its Deposit Withdrawal At Custodian system, provided that the Company’s Common
Stock is DTC eligible and the Company’s transfer agent participates in the
Deposit Withdrawal at Custodian system. Such delivery must be made on or before
the Legend Removal Date or the date the Shares are to be delivered pursuant to
the Certificate of Designation, as the case may be.

(f)              Injunction. In the event a Purchaser shall request delivery of
Shares as described in this Section 4.1 or Common Stock pursuant to the
Certificate of Designation and the Company is required to deliver such Shares,
the Company may not refuse to deliver Shares based on any claim that such
Purchaser or anyone associated or affiliated with such Purchaser has not
complied with Purchaser’s obligations under the Transaction Documents, or for
any other reason, unless, an injunction or temporary restraining order from a
court, on notice, restraining and or enjoining delivery of such unlegended
shares shall have been sought and obtained by the Company and the Company has
posted a surety bond for the benefit of such Purchaser in the amount of the
greater of (i) 120% of the amount of the aggregate purchase price of the Shares
and Warrant Shares which is subject to the injunction or temporary restraining
order, or (ii) the VWAP of the Common Stock on the trading day before the issue
date of the injunction multiplied by the number of Shares to be subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.

 
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(g)              Buy-In.  In addition to any other rights available to
Purchaser, if the Company fails to deliver to a Purchaser Shares as required
pursuant to this Agreement or pursuant to the Certificate of Designation and
after the Legend Removal Date or required delivery date pursuant to the
Certificate of Designation the Purchaser, or a broker on the Purchaser’s behalf,
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Purchaser of the shares of Common
Stock which the Purchaser was entitled to receive in unlegended form from the
Company (a “Buy-In”), then the Company shall promptly pay in cash to the
Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (B) the aggregate purchase price of the shares of Common Stock delivered
to the Company for reissuance as unlegended Shares or as are required to be
delivered pursuant to the Certificate of Designation, as the case may be,
together with interest thereon at a rate of 15% per annum accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty).  For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to $10,000 of purchase price of Shares delivered to
the Company for reissuance as unlegended shares, the Company shall be required
to pay the Purchaser $1,000, plus interest, if any. The Purchaser shall provide
the Company written notice indicating the amounts payable to the Purchaser in
respect of the Buy-In.
 
4.2           Furnishing of Information; Public Information.
 
(a)           Until the earliest of the time that (i) no Purchaser owns any
outstanding Securities, (ii) the Warrants have expired, or (iii) five (5) years
after the Closing Date, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
 
(b)           At any time commencing on the Closing Date and ending at such time
that all of the Securities may be sold without the requirement for the Company
to be in compliance with Rule 144(c)(1) and otherwise without restriction or
limitation pursuant to Rule 144, if the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available
remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the aggregate Subscription Amount of such Purchaser’s Securities held by such
Purchaser on the day of a Public Information Failure and on every thirtieth
(30th) day (pro-rated for periods totaling less than thirty days) thereafter
until the earlier of (a) the date such Public Information Failure is cured and
(b) such time that such public information is no longer required  for the
Purchasers to transfer the Underlying Shares pursuant to Rule 144.  The payments
to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are
referred to herein as “Public Information Failure Payments.”  Public Information
Failure Payments shall be paid on the earlier of (i) the last day of the
calendar month during which such Public Information Failure Payments are
incurred and (ii) the third (3rd) Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured.  In the event the
Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. Nothing herein shall
limit such Purchaser’s right to pursue actual damages for the Public Information
Failure, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

4.3          Integration.  The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities by the Company in a manner that would require the registration
under the Securities Act of the sale of the Securities or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

 
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4.4           Securities Laws Disclosure; Publicity.  The Company shall, by 9:00
a.m. (New York City time) on the third (3rd) Trading Day immediately following
the Closing Date, issue a press release disclosing the material terms of the
transactions contemplated hereby, and shall file a Current Report on Form 8-K
including the Transaction Documents as exhibits thereto within the time period
proscribed by the Exchange Act.  From and after the issuance of such press
release and Form 8-K, the Company represents to the Purchasers that it shall
have publicly disclosed all material, non-public information delivered to any of
the Purchasers by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. The Company and each
Purchaser shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release nor otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of any Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.  Notwithstanding
the foregoing, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market unless the name of such
Purchaser is already included in the body of the Transaction Documents, without
the prior written consent of such Purchaser, except: (a) as required by federal
securities law in connection with the filing of final Transaction Documents with
the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure permitted under this clause (b).

4.5           Non-Public Information.  Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on
its behalf, will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have entered into a
written agreement with the Company regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.
 
4.6           Use of Proceeds.  The Company will use the net proceeds to the
Company from the sale of the Shares and Preferred Stock and Warrants hereunder
as set forth on Schedule 4.6.  The Company shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common Stock
Equivalents, (c) for the settlement of any outstanding litigation, or (d) in
violation of the law, including FCPA or OFAC.
 
4.7           Indemnification of Purchasers.   Subject to the provisions of this
Section 4.7, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with
any such stockholder or any violations by such Purchaser Party of Securities
Laws or any conduct by such Purchaser Party which constitutes fraud, gross
negligence, willful misconduct or malfeasance).  If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party. 

 
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Any Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of such Purchaser Party’s counsel, a material conflict on
any material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel for all
Purchaser Parties.  The Company will not be liable to any Purchaser Party under
this Agreement (iv) for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld,
conditioned or delayed; or (v) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach
of any of the representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction Documents.  The
indemnification required by this Section 4.7 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or are incurred.  The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.

4.8          Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement (other than Section 4.14 but only to the extent the number of shares
of Common Stock issuable under Section 4.14 is not known) and Warrant Shares
pursuant to any exercise of the Warrants (such amount being the “Required
Minimum”).  If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than the Required Minimum
on such date, then the Board of Directors shall use commercially reasonable
efforts to amend the Company’s certificate or articles of incorporation to
increase the number of authorized but unissued shares of Common Stock to at
least the Required Minimum at such time, as soon as possible and in any event
not later than the 60th day after such date.
 
4.9        Listing of Common Stock. The Company hereby agrees to maintain the
listing or quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with the Closing, if applicable, the Company
shall apply to list or quote all of the Shares and Warrant Shares on such
Trading Market and promptly secure the listing of all of the Shares and Warrant
Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Shares and Warrant Shares, and will
take such other action as is necessary to cause all of the Shares and Warrant
Shares to be listed or quoted on such other Trading Market as promptly as
possible.  The Company will then take all action necessary to continue the
listing or quotation and trading of its Common Stock on a Trading Market until
the later of (i) at least five years after the Final Closing Date, and (ii) for
so long as the Warrants are outstanding, and will comply in all respects with
the Company’s reporting, filing and other obligations under the bylaws or rules
of the Trading Market at least until five years after the Final Closing Date and
for so long as the Warrants are outstanding.  In the event the aforedescribed
listing is not continuously maintained for five years after the Final Closing
Date (a “Listing Default”), then in addition to any other rights the Purchasers
may have hereunder or under applicable law, on the first day of a Listing
Default and on each monthly anniversary of each such Listing Default date (if
the applicable Listing Default shall not have been cured by such date) until the
applicable Listing Default is cured, the Company shall pay to each Purchaser an
amount in cash, as partial liquidated damages and not as a penalty, equal to 2%
of the aggregate Subscription Amount and purchase price of Warrant Shares
actually held by such Purchaser on the day of a Listing Default and on every
thirtieth day (pro-rated for periods less than thirty days) thereafter until the
date such Listing Default is cured.  If the Company fails to pay any liquidated
damages pursuant to this Section in a timely manner, the Company will pay
interest thereon at a rate of 1.5% per month (pro-rated for partial months) to
the Purchaser.

 
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4.10        Reimbursement.  If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser’s acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred.  The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchasers who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchasers and any such Affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person.  The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.
 
            4.11         Equal Treatment of Purchasers.  No consideration
(including any modification of any Transaction Document) shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the Purchasers that are parties to such Transaction
Document. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class
and shall not in any way be construed as the Purchasers acting in concert or as
a group with respect to the purchase, disposition or voting of Securities or
otherwise.
 
            4.12         Participation in Future Financing.

(a)           From the date hereof through the 24 month anniversary of the
Closing Date, upon any proposed issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration,
Indebtedness or a combination of cash consideration and Indebtedness, other than
(i) a rights offering to all holders of Common Stock, (ii) an underwritten
public offering of Common Stock or Common Stock Equivalents, or (iii) an Exempt
Issuance, (a “Subsequent Financing”), the Purchasers that still own outstanding
Securities shall have the right to participate in up to an amount of the
Subsequent Financing equal to 100% of the Subsequent Financing (the
“Participation Maximum”) on the same terms, conditions and price provided for in
the Subsequent Financing.

(b)           At least five (5) Trading Days prior to the closing of the
Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing Notice”).  Upon the
request of a Purchaser, and only upon a request by such Purchaser, for a
Subsequent Financing Notice, the Company shall promptly, but no later than one
(1) Trading Day after such request, deliver a Subsequent Financing Notice to
such Purchaser.  The requesting Purchaser shall be deemed to have acknowledged
that the Subsequent Financing Notice may contain material non-public
information.  The Subsequent Financing Notice shall describe in reasonable
detail the proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder and the Person or Persons through or with whom
such Subsequent Financing is proposed to be effected and shall include a term
sheet or similar document relating thereto as an attachment.
 
(c)           Any Purchaser desiring to participate in such Subsequent Financing
must provide written notice to the Company by not later than 5:30 p.m. (New York
City time) on the fifth (5th) Trading Day after all of the Purchasers have
received the Pre-Notice that such Purchaser is willing to participate in the
Subsequent Financing, the amount of such Purchaser’s participation, and
representing and warranting that such Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice.  If the Company receives no such notice from a Purchaser as of such
fifth (5th) Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate.

 
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(d)           If by 5:30 p.m. (New York City time) on the fifth (5th ) Trading
Day after all of the Purchasers have received the Pre-Notice, notifications by
the Purchasers of their willingness to participate in the Subsequent Financing
(or to cause their designees who at the time are Accredited Investors to
participate) is, in the aggregate, equal to or less than the aggregate amount of
the Participation Maximum, then the Company may effect the remaining portion of
such Subsequent Financing on the terms and with the Persons set forth in the
Subsequent Financing Notice.

(e)           If by 5:30 p.m. (New York City time) on the fifth (5th) Trading
Day after all of the Purchasers have received the Pre-Notice, the Company
receives responses to a Subsequent Financing Notice from Purchasers seeking to
purchase more than the aggregate amount of the Participation Maximum, each such
Purchaser shall have the right to purchase its Pro Rata Portion (as defined
below) of the Participation Maximum.  “Pro Rata Portion” means the ratio of (x)
the Subscription Amount of Shares and Warrants purchased hereunder by a
Purchaser participating under this Section 4.12 and (y) the sum of the aggregate
Subscription Amounts of Securities purchased hereunder by all Purchasers
participating under this Section 4.12.

(f)           The Company must provide the Purchasers with a second Subsequent
Financing Notice, and the Purchasers will again have the right of participation
set forth above in this Section 4.12, if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within forty-five (45)
Trading Days after the date of the initial Subsequent Financing Notice.

(g)           The Company and each Purchaser agree that if any Purchaser elects
to participate in the Subsequent Financing, the transaction documents related to
the Subsequent Financing shall not include any term or provision whereby such
Purchaser shall be required to agree to any restrictions on trading as to any of
the Securities purchased hereunder (for avoidance of doubt, the securities
purchased in the Subsequent  Financing shall not be considered securities
purchased hereunder) or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection
with, this Agreement, without the prior written consent of such Purchaser.

(h)           Notwithstanding anything to the contrary in this Section 4.12 and
unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent
Financing has been abandoned or shall publicly disclose its intention to issue
the securities in the Subsequent Financing, in either case in such a manner such
that such Purchaser will not be in possession of any material, non-public
information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice.  If by such tenth (10th) Business Day, no public
disclosure regarding a transaction with respect to the Subsequent Financing has
been made, and no notice regarding the abandonment of such transaction has been
received by such Purchaser, such transaction shall be deemed to have been
abandoned and such Purchaser shall not be deemed to be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries.

4.13        Acknowledgment of Dilution.  The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market
conditions.  The Company further acknowledges that its obligations under the
Transaction Documents, including, without limitation, its obligation to issue
the Shares and Warrant Shares pursuant to the Transaction Documents, are
unconditional and absolute, but subject to the terms and conditions of the
Transaction Documents, and not subject to any right of set off, counterclaim,
delay or reduction, regardless of the effect of any such dilution or any claim
the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the
Company.

 
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4.14           (a)           Purchase Price Reset. From the date of this
Agreement until the earlier of (i) such time as no Purchaser and his permitted
assigns holds any Securities and (ii) three years from the Closing Date (the
“Protection Period”), in the event that the Company issues or sells any shares
of Common Stock or any Common Stock Equivalent (calculated on an as converted,
as exercised basis) pursuant to which shares of Common Stock may be acquired at
a price less than the Per Share Purchase Price of either the Common Stock or
Preferred Stock, as the case may be (a “Share Dilutive Issuance”) (adjusted as
described in Section 5.23), then the Company shall promptly issue additional
shares of Common Stock (or Preferred Stock, as the case may be) to the
Purchasers who held outstanding Shares on the date of such Share Dilutive
Issuance, for no additional consideration, in an amount sufficient so that the
aggregate Subscription Amount paid at the Closing for such outstanding Shares
held by Purchasers on the date of such Share Dilutive Issuance (whether or not
such Purchasers were the Purchasers at the Closing), when divided by the sum of
(i) the total number of outstanding Shares held by the Purchasers on the date of
such Share Dilutive Issuance, (ii) any other shares of Common Stock then or
theretofore issued in respect of such outstanding Shares (by stock split, stock
dividend and similar event) that resulted in an adjustment to the Per Share
Purchase Price referred to above pursuant to Section 5.23, and (iii) all
Additional Shares issued with respect to such outstanding Shares held by the
Purchasers on the date of such Share Dilutive Issuance that were issued as a
result of Share Dilutive Issuances that occurred prior to such Share Dilutive
Issuance, will equal the price per share of Common Stock in such Share Dilutive
Issuance, (each such adjustment, a “Share Dilution Adjustment”, and such shares,
the “Additional Shares”).   The Additional Shares to be issued in a Share
Dilution Adjustment shall be issued by the Company to the Purchasers who held
outstanding Shares on the date of the applicable Share Dilutive Issuance (in
proportion to the number of such Shares held by such Purchasers on the date of
such Share Dilutive Issuance).  Such Share Dilution Adjustment shall be made
successively whenever such an issuance is made. Such Additional Shares must be
delivered to the applicable Purchasers not later than the date the Share
Dilutive Issuance occurs.  Not later than three (3) Trading Days after each
Share Dilutive Issuance (the “Share Delivery Date”), the Company shall deliver,
or cause to be delivered, to the Holder a certificate or certificates
representing the Additional Shares representing the number of Additional Shares
issuable upon a Share Dilution Adjustment.

From the date of this Agreement until the end of the Protection Period, in the
event that the Company issues or sells any shares of Common Stock or any Common
Stock Equivalent (calculated on an as converted, as exercised basis) pursuant to
which shares of Common Stock may be acquired at a price less than the exercise
price per share of Common Stock that was paid during the Protection Period by a
Purchaser upon exercise of a Warrant (a “Warrant Dilutive Issuance”) (adjusted
as described in Section 5.23), then the Company shall promptly issue additional
shares of Common Stock to the Purchasers who on the date of such Warrant
Dilutive Issuance held the issued Warrant Shares that were issued upon such
exercise, for no additional consideration, in an amount sufficient that (a) the
aggregate exercise price paid for such issued Warrant Shares held by the
Purchasers on the date of such Warrant Dilutive Issuance (whether or not such
Purchasers were the Purchasers who exercised such Warrant), when divided by (x)
the sum of (i) the total number of such issued Warrant Shares held by the
Purchasers on the date of such Warrant Dilutive Issuance, (ii) any other shares
of Common Stock then or theretofore issued in respect of such issued Warrant
Shares (by stock split, stock dividend or otherwise) that resulted in an
adjustment to the exercise price referred to above pursuant to Section 5.23, and
(iii) all Additional Warrant Shares issued with respect to such issued Warrant
Shares held by the Purchasers on the date of such Warrant Dilutive Issuance that
were issued as a result of Warrant Dilutive Issuances that occurred prior to
such Warrant Dilutive Issuance, will equal the price per share of Common Stock
in such Warrant Dilutive Issuance, (each such adjustment, a “Warrant Dilution
Adjustment”, and such shares, the “Additional Warrant Shares”).   The Additional
Warrant Shares to be issued in a Warrant Dilution Adjustment shall be issued by
the Company to the Purchasers who held the applicable issued Warrant Shares on
the date of the applicable Warrant Dilutive Issuance (in proportion to the
number of such issued Warrant Shares held by such Purchasers on the date of such
Warrant Dilutive Issuance).  Such Warrant Dilution Adjustment shall be made
successively whenever such an issuance is made. Such Additional Warrant Shares
must be delivered to the applicable Purchasers not later than the date the
Warrant Dilutive Issuance occurs.

 
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(b)           Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the Shares of Common Stock issuable on the exercise of the
Warrants or the Purchase Price of either the Common Stock or Preferred Stock, as
the case may be, pursuant to this Section 4.14, the Company at its expense will
promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment and prepare a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock or Common Stock Equivalent issued or sold or deemed to have been
issued or sold, (b) the number of shares of Common Stock outstanding or deemed
to be outstanding, and (c) the Purchase Price of either the Common Stock or
Preferred Stock, as the case may be, and the number of shares of Common Stock to
be received upon a Share Dilutive Issuance or Warrant Dilutive Issuance (as the
case may be) , in effect immediately prior to such adjustment or readjustment
and as adjusted or readjusted as provided in this Section 4.14.  The Company
will forthwith mail a copy of each such certificate to the Purchaser. Purchaser
will be entitled to the benefit of the adjustment regardless of the giving of
such notice. The Company shall promptly, but not later than the third (3rd)
business day after the effectiveness of the adjustment, provide notice to the
Purchaser setting forth the Additional Shares issuable after a Share Dilutive
Issuance or Warrant Dilutive Issuance adjustment and setting forth a statement
of the facts requiring such adjustment. The timely giving of such notice to
Purchaser is a material obligation of the Company.
 
(c)           Obligation Absolute; Partial Liquidated Damages.  The Company’s
obligations to issue and deliver Additional Shares and Additional Warrant Shares
in  accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Purchaser to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Purchaser or any other Person of any obligation to the Company or
any violation or alleged violation of law by the Purchaser or any other Person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Purchaser in connection with the issuance of
such Additional Shares or Additional Warrant Shares, as the case may be;
provided, however, that such delivery shall not operate as a waiver by the
Company of any such action the Company may have against the Purchaser.  If the
Company fails for any reason to deliver to the Purchaser such certificate or
certificates pursuant to this Section 4.14 by the Share Delivery Date, the
Company shall pay to the Purchaser, in cash, as liquidated damages and not as a
penalty, 1% per day Trading Day of the product of (A) such number of Additional
Shares or Additional Warrant Shares (as the case may be) that the Company was
required to deliver to such Purchaser by the Share Delivery Date multiplied by
(B) the highest Closing Sale Price (as defined) of the Common Stock on any
Trading Day during the period commencing on the date of a Share Dilutive
Issuance or Warrant Dilutive Issuance (as the case may be) by the Company and
ending on the date of such delivery this clause () (increasing to 1.5% per
Trading Day on the fifth (5th) Trading Day after such liquidated damages begin
to accrue) for each Trading Day after such Share Delivery Date until such
certificates are delivered.    Nothing herein shall limit a Purchaser’s right to
pursue actual damages pursuant to Section 4.1 hereof for the Company’s failure
to deliver shares within the period specified herein and the Purchaser shall
have the right to pursue all remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief.  The exercise of any such rights shall not prohibit the
Purchaser from seeking to enforce damages pursuant to any other Section hereof
or under applicable law.
 
Notwithstanding the foregoing, this Section 4.14 shall not apply in respect of
an Exempt Issuance.  No adjustment shall be made hereunder which would require
the Purchaser to surrender any shares to the Company.  The holder of outstanding
Additional Shares and Additional Warrant Shares is granted the same rights and
benefits as a holder of outstanding Shares pursuant to the Transaction
Documents, except the rights and benefits of this Section 4.14 and except that
such rights and benefits shall not apply to a holder of outstanding Additional
Shares or Additional Warrant Shares after such outstanding Additional Share or
Additional Warrant Share has been irrevocably sold pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144 without
further restrictions or conditions to transfer pursuant to Rule 144.

4.15           Most Favored Nation Provision.  From the date hereof until the
end of the Protective Period, in the event that the Company issues or sells any
Common Stock, if a Purchaser then holding outstanding Securities reasonably
believes that any of the terms and conditions appurtenant to such issuance or
sale are more favorable to such investors than are the terms and conditions
granted to the Purchasers hereunder, upon notice to the Company by such
Purchaser within five Trading Days after disclosure of such issuance or sale,
the Company shall amend the terms of this transaction as to such Purchaser only
so as to give such Purchaser the benefit of such more favorable terms or
conditions.  This Section 4.15 shall not apply with respect to an Exempt
Issuance. The Company shall provide each Purchaser with notice of any such
issuance or sale in the manner for disclosure of Subsequent Financings set forth
in Section 4.12.

 
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4.16           DTC Program.  At all times that Warrants are outstanding, the
Company will employ as the transfer agent for the Common Stock and Warrant
Shares a participant in the Depository Trust Company Automated Securities
Transfer Program and cause the Common Stock to be transferable pursuant to such
program.

4.17           Form D; Blue Sky Filings.  The Company agrees to timely file a
Form D with respect to the sale of the Securities by the Company under this
Agreement as required under Regulation D. The Company shall take such action as
the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to qualify the Securities for, sale to the Purchasers at the
Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.

4.18           Shareholder Rights Plan.  No claim will be made or enforced by
the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.

4.19           Exercise Procedure.  The form of Notice of Exercise included in
the Warrants sets forth the totality of the procedures required of the
Purchasers in order to exercise the Warrants.  No additional legal opinion,
other information or instructions shall be required of the Purchasers to
exercise their Warrants.  The Company shall honor exercises of the Warrants and
shall deliver Warrant Shares in accordance with the terms, conditions and time
periods set forth in the Transaction Documents.

4.20           Subsequent Equity Sales.   Without prior written approval from
Holder, from the date hereof until twenty-four months after the Closing Date,
the Company will not, without the consent of the Purchasers, enter into any
Equity Line of Credit or similar agreement, nor exercise of any of its rights
under any Equity Line of Credit entered into as of the Closing Date, floating or
Variable Priced Equity Linked Instruments nor any of the foregoing or equity
with price reset rights (subject to adjustment for stock splits, distributions,
dividends, recapitalizations and the like) (collectively, the “Variable Rate
Transaction”).   For purposes hereof, “Equity Line of Credit” shall include any
transaction involving a written agreement between the Company and an investor or
underwriter whereby the Company has the right to “put” its securities to the
investor or underwriter over an agreed period of time and at an agreed price or
price formula, whether entered into prior to or after the Closing Date,
including but not limited to the arrangements described in the Form 10-Q filed
by the Company on November 14, 2013 and Form 8-K filed on January 31, 2014; and
“Variable Priced Equity Linked Instruments” shall include: (A) any debt or
equity securities which are convertible into, exercisable or exchangeable for,
or carry the right to receive additional shares of Common Stock either (1) at
any conversion, exercise or exchange rate or other price that is based upon
and/or varies with the trading prices of or quotations for Common Stock at any
time after the initial issuance of such debt or equity security, or (2) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date at any time after the initial issuance of such debt or equity
security due to a change in the market price of the Company’s Common Stock since
date of initial issuance, and (B) any amortizing convertible security which
amortizes prior to its maturity date, where the Company is required or has the
option to (or any investor in such transaction has the option to require the
Company to) make such amortization payments in shares of Common Stock which are
valued at a price that is based upon and/or varies with the trading prices of or
quotations for Common Stock at any time after the initial issuance of such debt
or equity security (whether or not such payments in stock are subject to certain
equity conditions).  For purposes of determining the total consideration for a
convertible instrument (including a right to purchase equity of the Company)
issued, subject to an original issue or similar discount or which principal
amount is directly or indirectly increased after issuance, the consideration
will be deemed to be the actual cash amount received by the Company in
consideration of the original issuance of such convertible instrument.  Except
for an Exempt Issuance, until twenty-four (24) months after the Closing Date,
the Company will not issue any Common Stock or Common Stock Equivalents to
officers, directors, employees, consultants and service providers of the Company
except in the amounts and on the terms set forth on Schedule 4.20.  Except for
an Exempt Issuance, until twelve (12) months after the Closing Date, without
Consent, the Company will not amend the terms of any securities or Common Stock
Equivalents or of any agreement outstanding or in effect as of the date of this
Agreement pursuant to which same were or may be acquired nor issue any Common
Stock or Common Stock Equivalents.

 
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4.21   Certain Transactions and Confidentiality. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that neither it, nor any
Affiliate acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales, of any of the Company’s
securities during the period commencing with the execution of this Agreement and
ending at such time that the transactions contemplated by this Agreement are
first publicly disclosed or required to be disclosed, whichever occurs first, in
the Form 8-K described in Section 4.4.  Each Purchaser, severally and not
jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed or required
to be publicly disclosed, whichever occurs first, by the Company in such Form
8-K, such Purchaser will maintain the confidentiality of the existence and terms
of this transaction and the information included in the Transaction Documents
and the Disclosure Schedules.  Notwithstanding the foregoing, and
notwithstanding anything contained in this Agreement to the contrary, the
Company expressly acknowledges and agrees that (i) no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are required to be disclosed in the
Form 8-K described in Section 4.4, (ii) no Purchaser shall be restricted or
prohibited from effecting any transactions in any securities of the Company in
accordance with applicable Securities Laws from and after the time that the
transactions contemplated by this Agreement are first disclosed or required to
be disclosed, whichever occurs first, in the Form 8-K described in Section 4.4,
and (iii) no Purchaser shall have any duty of confidentiality to the Company or
its Subsidiaries after the filing of such Form 8-K or after the date such Form
8-K is required to have been filed, whichever occurs first.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such
Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement.

4.22           Intentionally Omitted. 

4.23           Piggy-Back Registrations. If at any time after the Closing Date
there is not an effective registration statement covering all of the issued
Shares and Warrant Shares and the Company determines to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, but excluding (i) Forms S-4 or S-8 and similar forms which do not
permit such registration and (ii) any amendment to the Company’s Registration
Statement on Form S-1 (File No. 333-191381), then the Company shall send to each
holder of any of the issued Securities written notice of such determination and,
if within fifteen calendar days after receipt of such notice, any such holder
shall so request in writing, the Company shall include in such registration
statement all or any part of the Shares, and Warrant Shares such holder requests
to be registered and which inclusion of such Shares and Warrant Shares will be
subject to customary underwriter cutbacks applicable to all holders of
registration rights and minimum cutbacks in accordance with guidance provided by
the Securities and Exchange Commission (including, but not limited to, Rule
415). The obligations of the Company under this Section may be waived by any
holder of any of the Securities entitled to registration rights under this
Section 4.23.  The holders whose Shares and Warrant Shares are included or
required to be included in such registration statement are granted the same
rights, benefits, liquidated or other damages and indemnification granted to
other holders of securities included in such registration statement. In no event
shall the liability of any holder of Securities or permitted successor in
connection with any Shares and Warrant Shares included in any such registration
statement be greater in amount than the dollar amount of the net proceeds
actually received by such Purchaser upon the sale of the Shares and Warrant
Shares sold pursuant to such registration or such lesser amount in proportion to
all other holders of Securities included in such registration statement. All
expenses incurred by the Company in complying with Section 4.23, including,
without limitation, all registration and filing fees, printing expenses (if
required), fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the FINRA, transfer taxes, and fees of transfer agents and registrars, are
called “Registration Expenses.” All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are called "Selling
Expenses." The Company will pay all Registration Expenses in connection with the
registration statement under Section 4.23. Selling Expenses in connection with
each registration statement under Section 4.23 shall be borne by the holder and
will be apportioned among such holders in proportion to the number of Shares
included therein for a holder relative to all the securities included therein
for all selling holders, or as all holders may agree. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Shares and Warrant Shares of a
particular Purchaser that such Purchaser shall furnish to the Company in writing
such information and representation letters, including a completed form of a
securityholder questionnaire, with respect to itself and the proposed
distribution by it as the Company may reasonably request to assure compliance
with federal and applicable state securities laws.

 
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4.24           Purchaser’s Exercise Limitations.  The Company shall not effect
any exercise of the option granted to each Purchaser in Sections 4.12 and 4.15
of this Agreement, and a Purchaser shall not have the right to exercise any
portion of such option, pursuant to Sections 4.12 and 4.15 or otherwise, to the
extent that after giving effect to such issuance after exercise as set forth on
the applicable Exercise Notice, the Purchaser (together with the Purchaser’s
Affiliates, and any other Persons acting as a group together with the Purchaser
or any of the Purchaser’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below).  For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Purchaser and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of the option with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exercise of the remaining, nonexercised
portion of the option beneficially owned by the Purchaser or any of its
Affiliates and (ii) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other  Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Purchaser or any of its Affiliates.  Except as set forth in the preceding
sentence, for purposes of this Section 4.24, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder, it being acknowledged by the Purchaser
that the Company is not representing to the Purchaser that such calculation is
in compliance with Section 13(d) of the Exchange Act and the Purchaser is solely
responsible for any schedules required to be filed in accordance therewith.   To
the extent that the limitation contained in this Section 4.24 applies, the
determination of whether the option is exercisable (in relation to other
securities owned by the Purchaser together with any Affiliates) and of which
portion of the option is exercisable shall be in the sole discretion of the
Purchaser, and the submission of an Exercise Notice shall be deemed to be the
Purchaser’s determination of whether the option is exercisable (in relation to
other securities owned by the Purchaser together with any Affiliates) and of
which portion of the option is exercisable, in each case subject to the
Beneficial Ownership Limitation.  To ensure compliance with this restriction, a
Purchaser will be deemed to represent to the Company when it delivers an
Exercise Notice that such Exercise Notice has not violated the restrictions set
forth in this paragraph, and the Company shall have no obligation to verify or
confirm the accuracy of such determination.   In addition, a determination as to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 4.24, in determining the number of
outstanding shares of Common Stock, a Purchaser may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of a Purchaser,
the Company shall within two Trading Days confirm orally and in writing to the
Purchaser the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including the Warrants, by the Purchaser or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was reported.  The
“Beneficial Ownership Limitation” shall be 9.99%, unless a Purchaser elects on
its signature page hereto a different amount for its own Beneficial Ownership
Limitation (which shall also apply to and supercede the corresponding Beneficial
Ownership Limitation as same relates to the Warrants issued to such electing
Purchaser) of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon
exercise of the option.  The Purchaser may decrease the Beneficial Ownership
Limitation at any time and the Purchaser, upon not less than 61 days’ prior
notice to the Company, may increase the Beneficial Ownership Limitation
provisions of this Section 4.24, provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock upon exercise of the option held by the Purchaser and the provisions of
this Section 4.24 shall continue to apply.  Any such increase will not be
effective until the 61st day after such notice is delivered to the Company.  The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4.24 to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of the option right.  In the event the limitations in this
Section 4.24 would prevent the exercise of a Purchaser’s rights under Sections
4.12 or 4.26, then such Purchaser may exercise all such rights and comply with
all obligations applicable thereto except that the delivery of Common Stock will
be deferred until such time as such Purchaser provides notice to the Company
that such Purchaser may receive or beneficially own such Common Stock which
exceeds the Beneficial Ownership Limitation without exceeding the then
applicable Beneficial Ownership Limitation.

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

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

4.27           Rights of Holder of Preferred Stock and Shares Issued or Issuable
Upon Conversion of the Preferred Stock.  The holders of Preferred Stock and
Shares of Common Stock into which the Preferred Stock are convertible are
granted all of the rights and benefits of purchasers of Shares hereunder on an
as converted basis, subject to the terms of the Certificate of Designation. For
purposes of Sections 4.12, 4.14, 4.15 and 4.23 and other sections of similar
import a holder of Preferred Stock will be deemed the holder of the underlying
Shares and have the rights and benefits of a Purchaser as if such Shares into
which the Preferred Stock are convertible are required pursuant to the
Transaction Documents as Shares, except as set forth in the Certificate of
Designation.  Nothing in this Section 4.27 is intended nor will it cause the
holder of Preferred Stock or Shares to exceed the Maximum Beneficial Ownership
Limitation.

ARTICLE V.
MISCELLANEOUS
 
5.1         Termination.  This Agreement may be terminated by any Purchaser, as
to such Purchaser’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written
notice given at any time to the Company, if the Closing has not been consummated
on or before  February 16, 2014; provided, however, that such termination will
not affect the right of any party to sue for any breach by any other party (or
parties).  In the event of any termination by a Purchaser under this Section
5.1, the Company shall promptly (and in any event within two (2) Business Days
of such termination) send a Subscription Termination Notice (as defined in the
Escrow Agreement) to the Escrow Agent with respect to all of such Purchaser’s
subscription amount.
 
5.2         Fees and Expenses.  Except as expressly set forth in the Transaction
Documents and on Schedule 3.1(s) to the contrary, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.  Except as
set forth in the Warrants, the Company shall pay all Transfer Agent fees, stamp
taxes and other similar taxes and duties levied in connection with the delivery
of any Securities to the Purchasers. At the Closing the Company agrees to pay
pursuant to the Escrow Agreement reasonable legal and Escrow Agent fees of G&M
in the amount of $25,000 (of which $7,500 has been paid), counsel to some of the
Purchasers, incurred in connection with the negotiation, preparation, execution
and delivery of the Transaction Documents.
 
5.3         Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.

5.4         Notices.  All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or

 
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(b) on the second business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such communications
shall be: (i) if to the Company, to: Be Active Holdings Inc., 1010 Northern
Blvd., Great Neck, NY 11021, Attn: David Wolfson, Chief Financial Officer,
facsimile: [REQUIRES COMPLETION], with a copy by fax only to (which shall not
constitute notice): Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd
Floor, New York, NY 10006, Attn: Harvey Kesner, Esq., facsimile: (212) 930-9725,
(ii) if to the Purchasers, to: the addresses and fax numbers indicated on the
signature pages hereto, with an additional copy by fax only to (which shall not
constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream,
New York 11581, facsimile: (212) 697-3575, and (iii) if to Palladium Capital
Advisors, LLC, 230 Park Avenue, Suite 539, New York, NY 10169, Fax: (646)
390-6328.

5.5           Amendments; Waivers.  No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least
a majority in interest of the component of the affected Securities then
outstanding or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.  No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.
 
5.6           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
5.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns. 
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger).  Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Purchasers.” 
 
5.8           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.
 
5.9           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law.  If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then in addition to the
obligations of the Company under Section 4.7, the prevailing party in such
action, suit or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 
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5.10         Survival.  The representations and warranties contained herein
shall survive the Closing and the delivery of the Securities at the Closings for
the applicable statute of limitations.
 
5.11         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.
 
5.12         Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
5.13         Rescission and Withdrawal Right.  Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of an exercise of a Warrant, the
applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to
such Purchaser of the aggregate exercise price paid to the Company for such
shares and the restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of a replacement
warrant certificate evidencing such restored right).

5.14         Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
surrender and cancellation thereof (in the case of mutilation), or in lieu of
and substitution therefor, a new certificate or instrument, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft,
destruction, or mutilation, and of the ownership of such Security.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity and
bonds) associated with the issuance of such replacement Securities.
 
5.15         Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
 
5.16         Payment Set Aside.  To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

 
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5.17         Independent Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or in any other Transaction Document, and no action taken by any Purchaser
pursuant hereof or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose.  Each Purchaser has been represented
by its own separate legal counsel in its review and negotiation of the
Transaction Documents.  For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company
through G&M.  G&M does not represent all of the Purchasers.  The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by any of the Purchasers.  It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction
Document is between the Company and a Purchaser, solely, and not between the
Company and the Purchasers collectively and not between and among the
Purchasers.

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

5.19         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 not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.
 
5.20         Construction. The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.

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

 
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5.22         WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

5.23 Equitable Adjustment.  Trading volume amounts, price/volume amounts and
similar figures in the Transaction Documents shall be equitably adjusted (but
without duplication) to offset the effect of stock splits, similar events and as
otherwise described in this Agreement and Warrants.  Subject to the foregoing,
the imputed value of each Share of Preferred Stock or Shares of Common Stock
issuable upon conversion of the Preferred Stock shall be $0.03 for purposes of
determining liquidated damages hereunder, or other values related to the
purchase price.

5.24              Consent.  As employed herein, “Consent” shall mean consent of
the holders of the majority of the then outstanding effected component of the
Securities on the date such consent is requested or required.
 

(Signature Pages Follow)

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

BE ACTIVE HOLDINGS INC.
 
Address for Notice:
 
   
 
1010 Northern Blvd.
Great Neck, NY 11021
Fax:
By: 
     
Name:
     
Title: 
           
With a copy to (which shall not constitute notice):
         
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Floor
New York, NY 10006
Attn: Harvey Kesner, Esq.
Fax: (212) 930-9725
   

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
 
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[PURCHASER SIGNATURE PAGES TO BE ACTIVE HOLDINGS INC.
SECURITIES PURCHASE AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

Name of Purchaser:
________________________________________________________________

Signature of Authorized Signatory of Purchaser:
__________________________________________

Name of Authorized Signatory:
_______________________________________________________

Title of Authorized Signatory:
________________________________________________________

Address for Notice of Purchaser:

 
The undersigned Purchaser hereby elects to purchase Securities in the form of:

Common Stock

           Series C Preferred Stock (by 5% or greater holders only)
 
Address for Delivery of Securities for Purchaser (if not same as address for
notice):

 
Closing Subscription Amount: US$________________

Closing Common Shares: ___________________

Closing Series C Preferred Stock (by 5% or greater holders only):
___________________

Closing Warrants: ___________________

EIN Number, if applicable, will be provided under separate cover:
________________________

Beneficial Ownership Limitation: _________%

 
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EXHIBIT D

ACCREDITED INVESTOR QUESTIONNAIRE
IN CONNECTION WITH INVESTMENT IN COMMON STOCK
OR PREFERRED STOCK AND WARRANTS
OF BE ACTIVE HOLDINGS INC.,
A DELAWARE CORPORATION
PURSUANT TO SECURITIES PURCHASE AGREEMENT DATED FEBRUARY ___, 2014
 
TO :        
 
 
INSTRUCTIONS
 
PLEASE ANSWER ALL QUESTIONS. If the appropriate answer is “None” or “Not
Applicable”, so state.  Please print or type your answers to all questions.
Attach additional sheets if necessary to complete your answers to any item.
 
Your answers will be kept strictly confidential at all times. However, Palladium
Capital Advisors, LLC (the “Company”) may present this Questionnaire to such
parties as it deems appropriate in order to assure itself that the offer and
sale of securities of the Company will not result in a violation of the
registration provisions of the Securities Act of 1933, as amended, or a
violation of the securities laws of any state.
 
1.           Please provide the following information:
 
Name:                                                                                                                                          
 
Name of additional
purchaser:                                                                                                                                          
 
(Please complete information in Question 5)
 
Date of birth, or if other than an individual, year of organization or
incorporation:
 
 
2.           Residence address, or if other than an individual, principal office
address:
 
 
Telephone
number:                                                                                                                                          
 
Social Security
Number:                                                                                                                                          
 
Taxpayer Identification
Number:                                                                                                                                          
 
3.  Business
address:                                                                                                                                          
 
 
Business telephone
number:                                                                                                                                          

 
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4.  Send mail to:                                           Residence
______                                           Business _______
 
5.           With respect to tenants in common, joint tenants and tenants by the
entirety, complete only if information differs from that above:
 
Residence
address:                                                                                                                                          
 
 
Telephone
number:                                                                                                                                          
 
Social Security
Number:                                                                                                                                          
 
Taxpayer Identification
Number:                                                                                                                                          
 
Business
address:                                                                                                                                          
 
 
Business telephone
number:                                                                                                                                          
 
Send Mail to:                                           Residence
_______                                           Business _______
 
6.           Please describe your present or most recent business or occupation
and indicate such information as the nature of your employment, how long you
have been employed there, the principal business of your employer, the principal
activities under your management or supervision and the scope (e.g. dollar
volume, industry rank, etc.) of such activities:
 
 
7.           Please state whether you (i) are associated with or affiliated with
a member of the Financial Industry Regulatory Association, Inc. (“FINRA”), (ii)
are an owner of stock or other securities of  FINRA member (other than stock or
other securities purchased on the open market), or (iii) have made a
subordinated loan to any FINRA member:
 
_______
_______

 
Yes
No

 
If you answered yes to any of (i) – (iii) above, please indicate the applicable
answer and briefly describe the facts below:
 

 
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8A.           Applicable to Individuals ONLY. Please answer the following
questions concerning your financial condition as an “accredited investor”
(within the meaning of Rule 501 of Regulation D).  If the purchaser is more than
one individual, each individual must initial an answer where the question
indicates a “yes” or “no” response and must answer any other question fully,
indicating to which individual such answer applies.  If the purchaser is
purchasing jointly with his or her spouse, one answer may be indicated for the
couple as a whole:
 
8.1           Does your net worth* (or joint net worth with your spouse) exceed
$1,000,000?
 
_______                                           _______
 
Yes                                           No
 
8.2           Did you have an individual income** in excess of $200,000 or joint
income together with your spouse in excess of $300,000 in each of the two most
recent years (2011 and 2012) and do you reasonably expect to reach the same
income level in the current year (2013)?
 
_______                                           _______
 
Yes                                           No
 
8.3           Are you an executive officer of the Company?
 
_______                                           _______
 
Yes                                           No
 
* For purposes hereof, net worth shall be deemed to include ALL of your assets,
liquid or illiquid MINUS any liabilities.
 
** For purposes hereof, the term “income” is not limited to “adjusted gross
income” as that term is defined for federal income tax purposes, but rather
includes certain items of income which are deducted in computing “adjusted gross
income”. For investors who are salaried employees, the gross salary of such
investor, minus any significant expenses personally incurred by such investor in
connection with earning the salary, plus any income from any other source
including unearned income, is a fair measure of “income” for purposes hereof.
For investors who are self-employed, “income” is generally construed to mean
total revenues received during the calendar year minus significant expenses
incurred in connection with earning such revenues.
 
8.B           Applicable to Corporations, Partnerships, Trusts, Limited
Liability Companies and other Entities ONLY:
 
The purchaser is an accredited investor because the purchaser falls within at
least one of the following categories (Check all appropriate lines):
 
 
___
(i) a bank as defined in Section 3(a)(2) of the Act or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity;

 
 
___
(ii) a broker-dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended;

 
 
___
(iii) an insurance company as defined in Section 2(13) of the Act;

 
 
___
(iv) an investment company registered under the Investment Company Act of 1940,
as amended (the “Investment Act”) or a business development company as defined
in Section 2(a)(48) of the Investment Act;

 
 
___
(v) a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958, as amended;

 
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___
(vi) a plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions, for
the benefit of its employees, where such plan has total assets in excess of
$5,000,000;

 
 
___
(vii) an employee benefit plan within the meaning of Title 1 of the Employee
Retirement Income Security Act of 1974, as amended (the “Employee Act”), where
the investment decision is made by a plan fiduciary, as defined in Section 3(21)
of the Employee Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or an employee benefit plan
that has total assets in excess of $5,000,000, or a self-directed plan the
investment decisions of which are made solely by persons that are accredited
investors;

 
 
___
(viii) a private business development company, as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, as amended;

 
 
___
(ix) an organization described in Section 501(c)(3) of the Internal Revenue
Code, a corporation, a Massachusetts or similar business trust, or a
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;

 
 
___
(x) a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a “sophisticated” person, as described in Rule 506(b)(2)(ii) promulgated
under the Act, who has such knowledge and experience in financial and business
matters that he or she is capable of evaluating the merits and risks of the
prospective investment;

 
 
___
(xi) an entity in which all of the equity investors are persons or entities
described above (“accredited investors”). ALL EQUITY OWNERS MUST COMPLETE
“EXHIBIT A” ATTACHED HERETO.

 
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9.A           Do you have sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks
associated with investing in the Company?
 
_______                                           _______
 
Yes                                           No
 
ANSWER QUESTION 9B ONLY IF THE ANSWER TO QUESTION 9A WAS “NO.”
 
9.B           If the answer to Question 9A was “NO,” do you have a financial or
investment adviser (a) that is acting in the capacity as a purchaser
representative and (b) who has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks
associated with investing in the Company?
 
_______                                           _______
 
Yes                                           No
 
If you have a financial or investment adviser(s), please identify each such
person and indicate his or her business address and telephone number in the
space below. (Each such person must complete, and you must review and
acknowledge, a separate Purchaser Representative Questionnaire which will be
supplied at your request).
 
 
10.           You have the right, will be afforded an opportunity, and are
encouraged to investigate the Company and review relevant factors and documents
pertaining to the officers of the Company, and the Company and its business and
to ask questions of a qualified representative of the Company regarding this
investment and the properties, operations, and methods of doing business of the
Company.
 
Have you or has your purchaser representative, if any, conducted any such
investigation, sought such documents or asked questions of a qualified
representative of the Company regarding this investment and the properties,
operations, and methods of doing business of the Company?
 
_______                                           _______
 
Yes                                           No
 
If so, briefly
describe:                                                                                                                                          
 

 
If so, have you completed your investigation and/or received satisfactory
answers to your questions?
 
_______                                           _______
 
Yes                                           No
 
11.           Do you understand the nature of an investment in the Company and
the risks associated with such an investment?
 
_______                                           _______
 
Yes                                           No
 
12.           Do you understand that there is no guarantee of any financial
return on this investment and that you will be exposed to the risk of losing
your entire investment?
 
_______                                           _______
 
Yes                                           No

 
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13.           Do you understand that this investment is not liquid?
 
_______                                           _______
 
Yes                                           No
 
14.           Do you have adequate means of providing for your current needs and
personal contingencies in view of the fact that this is not a liquid investment?
 
_______                                           _______
 
Yes                                           No
 
15.           Are you aware of the Company’s business affairs and financial
condition, and have you acquired all such information about the Company as you
deem necessary and appropriate to enable you to reach an informed and
knowledgeable decision to acquire the Interests?
 
_______                                           _______
 
Yes                                           No
 
16.           Do you have a “pre-existing relationship” with the Company or any
of the officers of the Company?
 
_______                                           _______
 
Yes                                           No
 
(For purposes hereof, “pre-existing relationship” means any relationship
consisting of personal or business contacts of a nature and duration such as
would enable a reasonably prudent investor to be aware of the character,
business acumen, and general business and financial circumstances of the person
with whom such relationship exists.)
 
If so, please name the individual or other person with whom you have a
pre-existing relationship and describe the relationship:
______________________________________________________________________________
 
______________________________________________________________________________
 
17.           Exceptions to the representations and warranties made in Section
3.2 of the Securities Purchase Agreement (if no exceptions, write “none” – if
left blank, the response will be deemed to be “none”):
___________________________________________________
 
_____________________________________________________________________________
 
Dated: _______________, 2014
 
If purchaser is one or more individuals (all individuals must sign):
 
(Type or print name of prospective purchaser)
 
Signature of prospective purchaser
 
Social Security Number
 
(Type or print name of additional purchaser)
 
Signature of spouse, joint tenant, tenant in common or other signature, if
required
 
Social Security Number

 
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Annex A
 
Definition of Accredited Investor
 
The securities will only be sold to investors who represent in writing in the
Securities Purchase Agreement that they are accredited investors, as defined in
Regulation D, Rule 501 under the Act which definition is set forth below:
 
1.           A natural person whose net worth, or joint net worth with spouse,
at the time of purchase exceeds $1 million (excluding home); or
 
2.           A natural person whose individual gross income exceeded $200,000 or
whose joint income with that person’s spouse exceeded $300,000 in each of the
last two years, and who reasonably expects to exceed such income level in the
current year; or
 
3.           A trust with total assets in excess of $5 million, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person described in Regulation D; or
 
4.           A director or executive officer of the Company; or
 
5.           The investor is an entity, all of the owners of which are
accredited investors; or
 
6.           (a) bank as defined in Section 3(a)(2) of the Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Act, (b) any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, (c) an insurance Company as defined in Section
2(13) of the Act, (d) an investment Company registered under the Investment
Company Act of 1940 or a business development Company as defined in Section
2(a)(48) of such Act, (e) a Small Business Investment Company licensed by the
United States Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, (f) an employee benefit plan established
and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, if such plan has total
assets in excess of $5  million, (g) an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Securities Act of 1974, and the
employee benefit plan has assets in excess of $5 million, or the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such act,
that is either a bank, savings and loan institution, insurance Company, or
registered investment advisor, or, if a self-directed plan, with an investment
decisions made solely by persons that are accredited investors, (h) a private
business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940, or (i) an organization described in Section 501(c)(3) of
the Internal Revenue code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the securities
offered, with assets in excess of $5 million.

 
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EXHIBIT “A” TO ACCREDITED INVESTOR QUESTIONNAIRE
 
ACCREDITED CORPORATIONS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES, TRUSTS OR
OTHER ENTITIES INITIALING QUESTION 8B(xi) MUST PROVIDE THE FOLLOWING
INFORMATION.
 
I hereby certify that set forth below is a complete list of all equity owners in
__________________ [NAME OF ENTITY], a
                                                [TYPE OF ENTITY] formed pursuant
to the laws of the State of                                     . I also certify
that EACH SUCH OWNER HAS INITIALED THE SPACE OPPOSITE HIS OR HER NAME and that
each such owner understands that by initialing that space he or she is
representing that he or she is an accredited individual investor satisfying the
test for accredited individual investors indicated under “Type of Accredited
Investor.”
 
__________________________________________
signature of authorized corporate officer, general partner or trustee
 
Name of Equity
Owner                                                                Type of
Accredited Investor1
 
1.                                                                                                                                          
 
2.                                                                                                                                          
 
3.                                                                                                                                          
 
4.                                                                                                                                          
 
5.                                                                                                                                          
 
6.                                                                                                                                          
 
7.                                                                                                                                          
 
8.                                                                                                                                          
 
9.                                                                                                                                          
 
10.                                                                                                                                          

--------------------------------------------------------------------------------

 1           Indicate which Subparagraph of 8.1 - 8.3 the equity owner
satisfies.