SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of May 20, 2014,
by and between IDS INDUSTRIES, INC., a Nevada corporation, with headquarters
located at 533 Birch Street, Lake Elsinore, CA 92530 (the "Company"), and
WORLDWIDE, INC., a New York corporation , with its address at 80 Cuttermill
Road, 410, Great Neck, NY 11021 (the "Buyer").

 

WHEREAS:

 

A.                   The Company and the Buyer are executing and delivering this
Agreement reliance upon the exemption from securities registration afforded by
the rules and regulation promulgated by the United States Securities and
Exchange Commission (the "SEC") und Securities Act of 1933, as amended (the
"1933 Act");

 

B.                   Buyer desires to purchase and the Company desires to issue
and sell, up terms and conditions set forth in this Agreement an 8% convertible
note of the Company, form attached hereto as Exhibit A, in the aggregate
principal amount of $53,000.00 (to with any note(s) issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, the "Note"), convertible into shares of common stock,
$0.001 par value per share, of the Company (the "Common Stock"), upon the term
and subject to the limitations and conditions set forth in such Note.

 

C.                   The Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement , such principal amount of Note as is set forth
immediately below its name the signature pages hereto; and

 

NOW THEREFORE, the Company and the Buyer severally (and not jointly) agree as
follows:

 

1.                   Purchase and Sale of Note.

 

a.                   Purchase of Note. On the Closing Date (as defined below
Company shall issue and sell to the Buyer and the Buyer agrees to purchase from
the Company such principal amount of Note as is set forth immediately below the
Buyer's name signature pages hereto.

 

b.                  Form of Payment. On the Closing Date (as defined below), (
the Buyer shall pay the purchase price for the Note to be issued and sold to it
at the Closing (as defined below) (the "Purchase Price") by wire transfer of
immediately available funds to the Company, in accordance with the Company's
written wiring instructions , against delivery of the Note in the principal
amount equal to the Purchase Price as is set forth immediately below the Buyer's
name on the signature pages hereto, and (ii) the Company shall deliver such duly
executed Note on behalf of the Company, to the Buyer, against delivery of such
Purchase Price.

 

c.                   Closing Date. Subject to the satisfaction (or written
waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Note pursuant to this
Agreement (the "Closing Date") shall be 12:00 noon, Eastern Standard Time on or
about May 23, 2014, or such other mutually agreed upon time The closing of the
transactions contemplated by this Agreement (the "Closing") shall occur the
Closing Date at such location as may be agreed to by the parties.

 

2.                   Buyer's Representations and Warranties. The Buyer represent
and warrants to the Company that:

 

a.                   Investment Purpose. As of the date hereof, the Bu
purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note (including, without limitation, such
additional shares of Common St k, if any, as are issuable (i) on account of
interest on the Note, (ii) as a result of the events described in Sections 1.3
and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages
Amount (as defined in Section 2(f) below) pursuant to this Agreement, such
shares of Co on Stock being collectively referred to herein as the "Conversion
Shares" and, collectively with the Note, the "Securities") for its own account
and not with a present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration un r the 1933
Act; provided, however, that by making the representations herein, the Buyer
does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

 

 

 

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

 

c.                   Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
the registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth he order to determine the availability
of such exemptions and the eligibility of the Buyer to the Securities,
securities laws or to comply with the terms and conditions of any exemption
thereunder (in case). Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or lending arrangement.

 

g. Legends. The Buyer understands that the Note and, until sue time as the
Conversion Shares have been registered under the 1933 Act may be sold pursuant
to Rule 144 or Regulation S without any restriction as to the number of
securities as of a particular date that can then be immediately sold, the
Conversion Shares may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):

 

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

 

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale un effective registration statement filed
under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that t sale or transfer is effected.
The Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus

 

d.                  Information. The Buyer and its advisors, if any, have been,
a for so long as the Note remain outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have been
requested by the Buyer or its advisors. The Buyer and its advisors, if any, have
been, and for so long as the Note remain outstanding will continue be, afforded
the opportunity to ask questions of the Company. Notwithstanding the foregoing,
the Company has not disclosed to the Buyer any material nonpublic information
and will not disclose such information unless such information is disclosed to
the public prior to or pro following such disclosure to the Buyer. Neither such
inquiries nor any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, am affect Buyer's right to rely on
the Company's representations and warranties contained in Section 3 below. The
Buyer understands that its investment in the Securities involves a significant
degree of risk. The Buyer is not aware of any facts that may constitute a breach
any of the Company's representations and warranties made herein.

2

 

 

e.                   Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

 

f.                   Transfer or Re-sale. The Buyer understands that (i) the
sale or re-sale of the Securities has not been and is not being registered under
the 1933 Act or any applicable state securities laws, and the Securities may not
be transferred unless (a) the Sec are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer have delivered to the Company, at
the cost of the Buyer, an opinion of counsel that shall form, substance and
scope customary for opinions of counsel in comparable transactions effect that
the Securities to be sold or transferred may be sold or transferred pursuant
exemption from such registration , which opinion shall be accepted by the
Company,) the Securities are sold or transferred to an "affiliate" (as defined
in Rule 144 promulgated und r the 1933 Act (or a successor rule) ("Rule 144"))
of the Buyer who agrees to sell or otherwise transfer the Securities only in
accordance with this Section 2(f) and who is an Accredited Investor, (d) the
Securities are sold pursuant to Rule 144, or (e) the Securities are sold
pursuant to Regulation S under the 1933 Act (or a successor rule) ("Regulation
S"), and the Buyer shall have delivered to the Company, at the cost of the
Buyer, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall
be accepted by the Company; (ii) any sale of such Securities made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and further,
if said not applicable, any re-sale of such Securities under circumstances in
which the seller ( person through whom the sale is made) may be deemed to be an
underwriter (as that term defined in the 1933 Act) may require compliance with
some other exemption under the 19 or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or an state delivery
requirements, if any. In the event that the Company does not accept the opinion
of counsel provided by the Buyer with respect to the transfer of Securities
pursuant to an exemption from registration, such as Rule 144 or Regulation S, at
the Deadline, it will be consider an Event of Default pursuant to Section 3.2 of
the Note.

 

g.                   Authorization; Enforcement. This Agreement has been duly
and validly authorized. This Agreement has been duly executed and delivered on
behalf the Buyer, and this Agreement constitutes a valid and binding agreement
of the Buyer enforceable accordance with its terms.

 

h.                  Residency. The Buyer is a resident of the jurisdiction set
immediately below the Buyer's name on the signature pages hereto.

 

3.                   Representations and Warranties of the Company. The Company
represents and warrants to the Buyer that:

 

a.                   Organization and Qualification. The Company and each
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing good standing under the laws of the jurisdiction in which it is
incorporated, with full pow authority (corporate and other) to own, lease, use
and operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted. Schedule 3 (a sets forth a list of all of
the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its owners use of property or the nature of the business conducted by
it makes such qualification nee except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect. "Material Adverse
Effect" means any material adverse effect on the business, operations, assets,
financial condition or prospects of the Company or its Subsidiaries, if any,
taken as a whole, or on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith.
"Subsidiaries" means any corporation or other organization, whether incorporated
or unincorporated, in which the Company owns, directly or indirectly, any equity
or other ownership interest.

3

 

 

b.                  Authorization; Enforcement. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Note consummate the transactions contemplated hereby and thereby
and to issue the Securities accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement, the Note by the Company and the
consummation by it of the transactions contemplated and thereby (including
without limitation, the issuance of the Note and the issuance reservation for
issuance of the Conversion Shares issuable upon conversion or exercise thereof)
have been duly authorized by the Company's Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (ii ) this Agreement has been duly executed and
delivered by the Company by its authorize representative, and such authorized
representative is the true and official representative with authority to sign
this Agreement and the other documents executed in connection herewith bind the
Company accordingly, and (iv) this Agreement constitutes, and upon execution
delivery by the Company of the Note, each of such instruments will constitute, a
legal, valid binding obligation of the Company enforceable against the Company
in accordance with its terms.

 

c.                   Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of: (i) 490,000,000 shares of Common
Stock, $0.001 par value per share, of which 95,051,393 shares are issued and
outstanding; and (ii) 10,000,000 authorized shares of Preferred Stock, $0.001
par value per share, of which no shares are issued and outstanding; no shares
are reserved for issuance pursuant to the Company's stock option no shares are
reserved for issuance pursuant to securities (other than the Note and a nor
convertible promissory note in favor of the Buyer dated March 19, 2014 in the
amount of $53,000.00 for which 42,500,000 shares of Common Stock are presently
reserved) exercisable for, or convertible into or exchangeable for shares of
Common Stock and 52,500,000 shares are reserved for issuance upon conversion of
the Note. All of such outstanding shares of capital stock are, or upon issuance
will be, duly authorized, validly issued, fully paid and nonassessable. No
shares of capital stock of the Company are subject to preemptive rights any
other similar rights of the shareholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company. As of
the effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under
the Company or any of its Subsidiaries is obligated to register the sale of any
of its o their securities under the 1933 Act and (iii) there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) that will
be triggered by the issuance of the Note or the Conversion Shares. The Company
has furnished to the Buyer true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof ("Certificate of Incorporation
"), the Company s By laws, as in effect on the date hereof (the "By-laws"), and
the terms of all securities convertible into or exercisable for Common Stock of
the Company and the material rights of the holders thereof in respect thereto.
The Company shall provide the Buyer with a written update of this representation
signed by the Company's Chief Executive on behalf of the Company as of the
Closing Date.

 

d.                  Issuance of Shares. The Conversion Shares are duly
authorized and reserved for issuance and, upon conversion of the Note in
accordance with its respective terms, will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of shareholders of the Company and will not impose personal
liability upon the holder thereof.

 

e.                   Acknowledgment of Dilution. The Company understand and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance the Conversion Shares upon conversion of the Note. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Note in accordance with this Agreement, the Note is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders of the Company.

 

f.                   No Conflicts. The execution, delivery and performance of
this Agreement, the Note by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance and reservation for issuance of the Conversion Shares) will not (i)
conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellation
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both could Company or any of
its Subsidiaries in default) under, and neither the Company nor any Subsidiaries
has taken any action or failed to take any action that would give to others any
of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted, and shall
not be conducted so long as the Buyer owns any of the Securities, in violation
of any law, ordinance or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement , the Note in accordance
with the terms hereof or thereof or to issue and sell the Note in accordance
with the terms hereof and to issue the Conversion Shares upon conversion Note.
All consents, authorizations, orders, filings and registrations which the
Company required to obtain pursuant to the preceding sentence have been obtained
or effected on or to the date hereof. The Company is not in violation of the
listing requirements of the Over Counter Bulletin Board (the "OTCBB") and does
not reasonably anticipate that the Common Stock will be delisted by the OTCBB in
the foreseeable future. The Company a Subsidiaries are unaware of any facts or
circumstances which might give rise to any foregoing.

4

 

 

g.                   SEC Documents; Financial Statements. The Company has timely
filed all reports, schedules, forms, statements and other documents required to
be filed by I the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents "). Upon written request the Company will deliver
to the Buyer true and complete copies of the SEC Documents, except for such
exhibits and incorporated documents. As of their respective dates, the SEC
Documents complied in all material re with the requirements of the 1934 Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time were filed with the
SEC, contained any untrue statement of a material fact or omitted to ate a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the state made in any such SEC Documents is, or has
been, required to be amended or updated applicable law (except for such
statements as have been amended or updated in subs filings prior the date
hereof) As of their respective dates, the financial statements Company included
in the SEC Documents complied as to form in all material respect applicable
accounting requirements and the published rules and regulations of the SEC
respect thereto. Such financial statements have been prepared in accordance with
United generally accepted accounting principles, consistently applied, during
the periods involve fairly present in all material respects the consolidated
financial position of the Company consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to year-end
audit adjustments). Except as set forth in the financial statements of the Co
included in the SEC Documents, the Company has no liabilities, contingent or
otherwise other than (i) liabilities incurred in the ordinary course of business
subsequent to February 28, 2014, and (ii) obligations under contracts and
commitments incurred in the ordinary course of b and not required under
generally accepted accounting principles to be reflected in such fi statements,
which, individually or in the aggregate, are not material to the financial
condition operating results of the Company. The Company is subject to the
reporting requirements 1934 Act.

 

h.                  Absence of Certain Changes. Since February 28, 2014, there
has been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition,
results of operations, prospects or 193 Act reporting status of the Company or
any of its Subsidiaries.

 

i.                    Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their offices or directors
in their capacity as such, that could have a Material Adverse Effect. Schedule
3(i) contains a complete list and summary description of any pending or, to the
knowledge the Company, threatened proceeding against or affecting the Company or
any of its Subsidiaries, without regard to whether it would have a Material
Adverse Effect. The Company a d its Subsidiaries are unaware of any facts or
circumstances which might give rise to any the foregoing.

 

j.                    Patents, Copyrights, etc. The Company and each its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, applications, patent rights, inventions, know-how, trade secrets,
trademarks, trade applications, service marks, service names, trade names and
copyrights ("Intellectual Property") necessary to enable it to conduct its
business as now operated (and, as presently contemplated to be operated in the
future); there is no claim or action by any person pe1iaining to, or proceeding
pending, or to the Company's knowledge threatened, which challenges the right of
the Company or of a Subsidiary with respect to any Intellectual Property
necessary to enable it to conduct its business as now operated (and, as
presently contemplated to be operated in the future); to the best of the
Company's knowledge, the Company's or its Subsidiaries' current and intended
products, services and processes do not infringe on any Intellectual Property or
other right held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and
each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.

 

k.                  No Materially Adverse Contracts, Etc. Neither the Comp nor
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, judgment, decree, order, rule or regulation which in the judgment
of the Company's office or is expected in the future to have a Material Adverse
Effect. Neither the Company nor its Subsidiaries is a party to any contract or
agreement which in the judgment of the Com officers has or is expected to have a
Material Adverse Effect.

 

l.                    Tax Status. The Company and each of its Subsidiaries has
made or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate payment of all unpaid and
unreported taxes) and 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, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all 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 know of no basis for any such claim. The Company has not executed a with
respect to the statute of limitations relating to the assessment or collection
of any foreign federal, state or local tax. None of the Company's tax returns is
presently being audited by taxing authority.

 

m.                Certain Transactions. Except for arm's length transactions
pursuant to which the Company or any of its Subsidiaries makes payments in the
ordinary of business upon terms no less favorable than the Company or any of its
Subsidiaries obtain from third parties and other than the grant of stock options
disclosed on Schedule none of the officers, directors, or employees of the
Company is presently a party t transaction with the Company or any of its
Subsidiaries (other than for services as employees officers and directors),
including any contract, agreement or other arrangement providing furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, the knowledge of the Company, any corporation, partnership, trust
or other entity in which officer, director, or any such employee has a
substantial interest or is an officer, director, or partner.

5

 

 

n.                  Disclosure. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated her by is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties , prospects, operations or financial conditions, which,
under applicable law, r le or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's report filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).

 

o.                  Acknowledgment Regarding Buyer' Purchase of Securities. The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm's length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyer' purchase the Securities. The Company further represents to the
Buyer that the Company's decision to into this Agreement has been based solely
on the independent evaluation of the Company representatives.

 

p.                  No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the Securities to the Buyer. The issuance of the
Securities to the Buyer will not be integrated with any other issuance the
Company's securities (past, current or future) for purposes of any shareholder
approval provisions applicable to the Company or its securities.

 

q.                  No Brokers. The Company has taken no action which would rise
to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.

 

r.                    Permits; Compliance. The Company and each of its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "Company
Permits"), and there is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the Company Permits.
Neither the Company nor any of its Subsidiaries is in conflict with, or in
default or violation of, any of the Co Permits, except for any such conflicts,
defaults or violations which, individually or aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since Fe 28, 2014, neither the
Company nor any of its Subsidiaries has received any notification respect to
possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

 

s.                   Environmental Matters.

 

(i)                   There are, to the Company's knowledge, with respect to the
Company or any of its Subsidiaries or any predecessor of the Company, no past or
violations of Environmental Laws (as defined below), releases of any material in
environment, actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any of its Subsidiaries has received
any notice with respect to any of the foregoing, nor is any action pending or,
to the Company's knowledge, threatened in connection with any of the foregoing.
The term "Environmental Laws" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively,
"Hazardous Materials") into the environment, or otherwise relating to the
manufacture, processing, distribution use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, lie notices
or notice letters, orders, permits, plans or regulations issued, entered,
promulgated approved thereunder.

6

 

 

(ii)                 Other than those that are or were stored, used or disposed
of in compliance with applicable law, no Hazardous Materials are contained on or
about an real property currently owned, leased or used by the Company or any of
its Subsidiaries, a d no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, or used by the Company or
any of its Subsidiaries, except in the normal course of the Company's or any of
its Subsidiaries' business.

 

(iii)                There are no underground storage tanks on or und real
property owned, leased or used by the Company or any of its Subsidiaries that
are not in compliance with applicable law.

 

t.                    Title to Property. The Company and its Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company d its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such s are described in Schedule 3(t) or
such as would not have a Material Adverse Effect. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as would not
have a Material Adverse Effect.

 

u.                  Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect. Upon written request the Company will
provide to the Buyer true and correct copies of all policies relating to
directors' and officers' liability coverage, errors and omissions coverage and
commercial general liability coverage.

 

v.                  Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment Company's board of directors, to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transaction are recorded as necessary to permit
preparation of financial statements in conformity with gen rally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (I the recorded accountability for assets is compared with the
existing assets at reasonable interval and appropriate action is taken with
respect to any differences.

 

w.                 Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Co any, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment t any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment , kickback or other unlawful payment t any foreign or domestic
government official or employee.

7

 

 

x.                  Solvency. The Company (after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not, after giving effect to the transaction
contemplated this Agreement, have the ability to, nor does it intend to take any
action that would impair its ability to, pay its debts from time to time
incurred in connection therewith as such debts mature The Company did not
receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and, after giving effect to the transactions contemplated by
this Agreement does not anticipate or know of any basis upon which its auditors
might issue a qualified opinion in respect of its current fiscal year.

 

y.                  No Investment Company. The Company is not, and up the
issuance and sale of the Securities as contemplated by this Agreement will not
be an "investment company" required to be registered under the Investment
Company Act of 1940 (an "Investment Company"). The Company is not controlled by
an Investment Company.

 

z.                   Breach of Representations and Warranties by the Company. If
the Company breaches any of the representations or warranties set forth in this
Section 3, and in addition to any other remedies available to the Buyer pursuant
to this Agreement , it will be considered an Event of default under Section 3.4
of the Note.

 

4.                   COVENANTS.

 

a.                   Best Efforts. The parties shall use their best efforts to
satisfy timely each of the conditions described in Section 6 and 7 of this
Agreement.

 

b.                  Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof Buyer promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyer on or prior the Closing Date.

 

c.                   Use of Proceeds. The Company shall use the proceeds for
general working capital purposes.

 

d.                  Right of First Refusal. Unless it shall have first delivered
the Buyer, at least seventy two (72) hours prior to the closing of such Future
Offering (as defined herein), written notice describing the proposed Future
Offering ("ROFR Notice"), including the terms and conditions thereof, identity
of the proposed purchaser and proposed definitive documentation to be entered
into in connection therewith, and providing the Buyer an option during the
seventy two (72) hour period following delivery of such notice to purchase the
securities being offered in the Future Offering on the same terms as
contemplated by such Offering (the limitations referred to in this sentence and
the preceding sentence are collectively referred to as the "Right of First
Refusal") (and subject to the exceptions described below Company will not
conduct any equity (or debt with an equity component) financing in an a less
than $100,000 ("Future Offering(s) ") during the period beginning on the Closing
Da ending six (6) months following the Closing Date. Notwithstanding anything
contained he in to the contrary, the Company shall not consummate any Future
Offering with an investor, or an affiliate of such investor (collectively
"Prospective Investor"), identified on an ROFR Notice whereby the Buyer
exercised its Right of First Refusal for a period of forty (45) days following
such exercise; and any subsequent offer by a Prospective Investor is subject to
this Section 4(d) and the Right of First Refusal. In the event the terms and
conditions of a proposed future Offering are amended in any respect after
delivery of the notice to the Buyer concerning the proposed Future Offering, the
Company shall deliver a new notice to the Buyer describing the amended terms and
conditions of the proposed Future Offering and the Buyer thereafter shall have
an option during the seventy two (72) hour period following delivery of such new
no ice to purchase its pro rata share of the securities being offered on the
same terms as contemplated by such proposed Future Offering, as amended. The
foregoing sentence shall apply to such amendments to the terms and conditions of
any proposed Future Offering. The Right of First Refusal shall not apply to any
transaction involving (i) issuances of securities in a commitment underwritten
public offering (excluding a continuous offering pursuant to Rule under the 1933
Act) or (ii) issuances of securities as consideration for a merger, consolidate
purchase of assets, or in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital), or in
connection with the disposition acquisition of a business, product or license by
the Company. The Right of First Refuse shall not apply to the issuance of
securities upon exercise or conversion of the Company’s options, warrants or
other convertible securities outstanding as of the date hereof or to the of
additional options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan approved by the shareholders
of the Company.

8

 

 

e.                   Expenses. At the Closing, the Company shall reimburse Bu r
for expenses incurred by them in connection with the negotiation, preparation ,
execution, delivery and performance of this Agreement and the other agreements
to be executed in connection herewith ("Documents "), including, without
limitation, reasonable attorneys' and consultants' fees and expenses, transfer
agent fees, fees for stock quotation services, fees relating to any amendments
or modifications of the Documents or any consents or waivers of provisions in
the Documents, fees for the preparation of opinions of counsel, escrow fees, and
co restructuring the transactions contemplated by the Documents. When possible,
the Company must pay these fees directly, otherwise the Company must make
immediate payment for reimbursement to the Buyer for all fees and expenses
immediately upon written notice y the Buyer or the submission of an invoice by
the Buyer. The Company's obligation with respect to this transaction is to
reimburse Buyer' expenses shall be $3,000.

 

f.                   Financial Information. Upon written request the Company to
send or make available the following reports to the Buyer until the Buyer
transfers, assigns, or sells all of the Securities: (i) within ten (10) days
after the filing with the SEC, a copy of its Annual Report on Form 10-K its
Quarterly Reports on Form 10-Q and any Current Rep s on Form 8-K; (ii) within
one (1) day after release, copies of all press releases issued the Company or
any of its Subsidiaries; and (iii) contemporaneously with the making avail le or
giving to the shareholders of the Company, copies of any notices or other
information the Company makes available or gives to such shareholders.

 

g.                   [INTENTIONALLY DELETED]

 

h.                  Listing. The Company shall promptly secure the listing
Conversion Shares upon each national securities exchange or automated quotation
system, upon which shares of Common Stock are then listed (subject to official
notice of issuance so long as the Buyer owns any of the Securities, shall
maintain, so long as any other shares Common Stock shall be so listed, such
listing of all Conversion Shares from time to time issuable upon conversion of
the Note. The Company will obtain and, so long as the Buyer owns any of the
Securities, maintain the listing and trading of its Common Stock on the OTC or
any equivalent replacement exchange, the Nasdaq National Market ("Nasdaq"), the
Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange
("NYSE"), the American Stock Exchange ("AMEX") and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of the Financial Industry Regulatory Authority ("FINRA") and such
exchanges, as applicable. The Company shall promptly provide to the Buyer copies
of any notices it receives from the OTCBB and any other exchanges or quotation
systems on which the Common Stock is then listed regarding the continued
eligibility of the Common Stock for listing on such exchanges and quotation
systems.

 

i.                    Corporate Existence. So long as the Buyer beneficially o
Note, the Company shall maintain its corporate existence and shall not sell all
or substantia of the Company's assets, except in the event of a merger or
consolidation or sale of substantially all of the Company's assets, where the
surviving or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreement and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NY E or AMEX.

 

j.                    No Integration. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
1933 Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

 

k.                  Breach of Covenants. If the Company breaches any the
covenants set forth in this Section 4, and in addition to any other remedies
available to the pursuant to this Agreement, it will be considered an event of
default under Section 3.4 Note.

9

 

 

l.                    Failure to Comply with the 1934 Act. So long as the Buyer
beneficially owns the Note, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be subject to
the reporting requirements of the 1934 Act.

 

m.                Trading Activities. Neither the Buyer nor its affiliates has
an open short position in the common stock of the Company and the Buyer agree
that it shall not, that it will cause its affiliates not to, engage in any short
sales of or hedging transactions with respect to the common stock of the
Company.

 

5.                   Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent to issue certificates, registered
in the name of the Buyer or its nominee, for the Conversion Shares in such
amounts as specified from time to time by the Buyer to the Company upon
conversion of the Note in accordance with the terms thereof (the "Irrevocable
Transfer Agent Instructions"). In the event that the Borrower proposes to
replace its transfer agent, the Borrower shall provide, prior to the effective
date of such replacement, a fully executed Irrevocable Transfer Agent
Instructions in a form as initially delivered pursuant to the Purchase Agreement
(including but not limited to the provision to irrevocably reserve shares of
Common Stock in the Reserved Amount) signed by the successor transfer agent to
Borrower and the Borrower. Prior to registration of the Conversion Shares under
the 1933 Act or the date on which the Conversion Shares may be sold pursuant to
Rule 144 without any restriction as to the number of Securities as of a
particular date that can then be immediately sold, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that: (i) no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, and stop transfer instructions
to give effect to Section 2(f) hereof (in the case of the Conversion Shares,
prior to registration of the Conversion Shares under the 1933 Act or the date on
which the Conversion Shares may be sold pursuant to Rule 144 without any
restriction as to the number of Securities as of a particular date that can then
be immediately sold), will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided this Agreement and the
Note; (ii) it will not direct its transfer agent not to transfer or impair,
and/or hinder its transfer agent in transferring (or issuing)(electronically or
in certificated form) any certificate for Conversion Shares to be issued to the
Buyer upon conversion otherwise pursuant to the Note as and when required by the
Note and this Agreement; and will not fail to remove (or directs its transfer
agent not to remove or impairs, delays, hinders its transfer agent from
removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any certificate for any Conversion Shares issued to the
Buyer upon conversion of or otherwise pursuant to the Note as and when required
by the Note a this Agreement. Nothing in this Section shall affect in any way
the Buyer's obligation and agreement set forth in Section 2(g) hereof to comply
with all applicable prospectus delivery requirements, if any, upon re-sale of
the Securities. If the Buyer provides the Company, t the cost of the Buyer, with
(i) an opinion of counsel in form, substance and scope customary for opinions in
comparable transactions , to the effect that a public sale or transfer of such
Securities may be made without registration under the 1933 Act and such sale or
transfer is effected r (ii) the Buyer provides reasonable assurances that the
Securities can be sold pursuant to Rule 144, the Company shall permit the
transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Co acknowledges that the
remedy at law for a breach of its obligations under this Section 5 inadequate
and agrees, in the event of a breach or threatened breach by the Company
provisions of this Section, that the Buyer shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach and requiring
immediate transfer, without the necessity of showing economic loss and without
any bond or other security being required.

 

6.                   Conditions to the Company's Obligation to Sell. The
obligation the Company hereunder to issue and sell the Note to the Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company's sole benefit and may be waived by the Comp y at any time in its sole
discretion: same to the Company.

 

a.                   The Buyer shall have executed this Agreement and delivered
the same to the Company.

 

b.                   The Buyer shall have delivered the Purchase Price in
accordance with Section 1(b) above.

10

 

 

c.                    The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date , and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed , satisfied
or complied with by the Buyer at or prior to the Closing Date.

 

d.                   No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

 

7.                  Conditions to The Buyer's Obligation to Purchase. The
obligation of the Buyer hereunder to purchase the Note at the Closing is subject
to the satisfaction, at or before the Closing Date of each of the following
conditions, provided that these conditions are for the Buyer's sole benefit and
may be waived by the Buyer at any time in its sole discretion:

 

a.                   The Company shall have this Agreement and delivered the
same to the Buyer.

 

b.                   The Company shall have delivered to the Buyer the duly
executed Note (in such denominations as the Buyer shall request) in accordance
with Section l (b) above.

 

c.                    The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to a majority-in-interest of the Buyer, shall have been
delivered to and acknowledged in writing by the Company's Transfer Agent.

 

d.                   The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed , satisfied and complied in all material respect with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate or certificates, executed by the chief executive
officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer
including, but not limited to ce1iificates with respect to the Com Certificate
of Incorporation, By-laws and Board of Directors’ resolutions relating to
transactions contemplated hereby.

 

e.                    No litigation, statute, rule, regulation , executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.

 

f.                    No event shall have occurred which could reasonably be ex
to have a Material Adverse Effect on the Company including but not limited to a
change 1934 Act reporting status of the Company or the failure of the Company to
be timely in it Act reporting obligations.

 

g.                    The Conversion Shares shall have been authorized for
quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not
have been suspended by the SEC or the OTCBB.

 

h.                   The Buyer shall have received an officer's certificate
described in Section 3(c) above, dated as of the Closing Date.

 

8.                  Governing Law; Miscellaneous.

 

a.                   Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of Nassau. The parties this Agreement hereby irrevocably
waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or have
based upon forum non conveniens. The Company and Buyer waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and cost. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which prove invalid or unenforceable under any law shall not affect
the validity or enforceability other provision of any agreement. Each party
hereby irrevocably waives personal service process and consents to process being
served in any suit, action or proceeding in connection this Agreement or any
other Transaction Document 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.

11

 

 

b.                   Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.

 

c.                    Headings. The headings of this Agreement are for
convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.

 

d.                   Severability. In the event that any provision of this Agree
invalid or unenforceable under any applicable statute or rule of law, then such
provisions deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified conform with such statute or rule of law. Any provision
hereof which may proves invalid unenforceable under any law shall not affect the
validity or enforceability of any other pro hereof.

 

e.                    Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect matters covered herein and therein and, except as specifically set
forth herein or therein, either the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the majority in interest of the Buyer.

 

f.                    Notices. All notices, demands, requests, consents,
approval , 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
s 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 bel w (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 ring normal business hours where such notice is to
be received) or (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 address s for
such communications shall be:

 

If to the Company, to:

IDS INDUSTRIES, INC.

533 Birch Street

Lake Elsinore, CA 92530

Attn: SCOTT PLANTINGA, Chief Executive Officer

facsimile: [enter fax number]

 

With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

12

 

 

If to the Buyer:

KBM WORLDWIDE, INC.

80 Cuttermill Road –

Suite 410 Great Neck, NY 11021

Attn: Seth Kramer, President

e-mail: info@kwbmlaw.com

 

With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birnbaum & Maday LLP

Attn: Bernard S. Feldman, Esq.

acsimile: 516-466-3555

e-mail: dyork@nwbmlaw.com

 

Each party shall provide notice to the other party of any change in address.

 

g.                    Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), the may assign its
rights hereunder to any person that purchases Securities in a private
transaction from the Buyer or to any of its "affiliates," as that term is
defined under the 1934 Act, without the consent of the Company.

 

h.                   Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is t for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

i.                     Survival. The representations and warranties of the
Company and the agreements and covenants set forth in this Agreement shall
survive the closing here notwithstanding any due diligence investigation
conducted by or on behalf of the Buyer. Company agrees to indemnify and hold
harmless the Buyer and all their officers, directors, employees and agents for
loss or damage arising as a result of or related to any breach or alleged breach
by the Company of any of its representations, warranties and covenants set forth
this Agreement or any of its covenants and obligations under this Agreement,
including advancement of expenses as they are incurred.

 

j.                     Publicity. The Company, and the Buyer shall have the
right to review a reasonable period of time before issuance of any press
releases, SEC, OTCBB or FINRA filings, or any other public statements with
respect to the transactions contemplated hereby; provided, however , that the
Company shall be entitled, without the prior approval of the Buyer, to make any
press release or SEC, OTCBB (or other applicable trading market) or FINRA
filings with respect to such transactions as is required by applicable law and
regulations (although the Buyer shall be consulted by the Company in connection
with any such press release prior to its release and shall be provided with a
copy thereof and be given an opportunity to comment thereon).

 

k.                   Further Assurances. Each party shall do and perform, or
case to be done and performed, all such further acts and things, and shall
execute and deliver al such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement d the consummation of the
transactions contemplated hereby.

 

l.                     No Strict Construction. The language used in this
Agreement be deemed to be the language chosen by the parties to express their
mutual intent, and no les of strict construction will be applied against any
party.

 

m.                 Remedies. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyer by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the
Buyer shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Agreement
and to enforce specifically terms and provisions hereof, without the necessity
of showing economic loss and without bond or other security being required.

13

 

 

IN WITNESS WHEREOF, the undersigned Buyer and the Company have cause this
Agreement to be duly executed as of the date first above written.

 

IDS INDUSTRIES, INC. By: /s/ Scott Plantinga Scott Plantinga Chief Executive
Officer KBM WORLDWIDE, INC. By: /s/ Seth Kramer Seth Kramer President 80
Cuttermill Road – Suite 410 Great Neck, NY 11021

 

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

Aggregate Principal Amount of Note: $53,000.00 Aggregate Purchase Price:
$53,000.00

 

14