Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

           This Securities Purchase Agreement (“Agreement”) is made as of the
date last indicated below on the signature page hereof, by and between
SpendSmart Networks, Inc., a Delaware corporation having its principal offices
at 805 Aerovista Parkway, Suite 205, San Luis Obispo, CA 93401 (the “Company” or
“Borrower”) and the Purchaser (“Purchaser”) whose name and address are set forth
on the Signature Page to this Agreement.

R E C I T A L S

A. The Borrower is conducting a private offering (the “Offering”) of units
(“Units” or “Securities”) with each such Unit consisting of: (i) a 9%
Convertible Promissory Note substantially in the form as annexed hereto as
Exhibit A, (the “Note”) in the principal amount of $50,000, which may be
voluntarily converted into shares of the Company’s common stock, $0.001 par
value per share (the “Common Stock”) at a conversion price equal to $0.75, and
(ii) a warrant (the “Warrant”) to purchase up to 66,667 shares of Common Stock
of the Company at an exercise price per share equal to one dollar ($1.00), in
the form attached hereto as Exhibit B.
 
B. Purchasers understand that there is a great deal of risk, illiquidity and
uncertainty in the purchase of the Units herein, and that no assurance can be
made that the Borrower will repay the Notes, complete its business plan or, if
completed, that it will be successful in doing so.  Purchasers have received and
examined all of the Borrower’s SEC Reports (as defined in Section 3.7.1).

C. The offering of Units is being made directly by the Borrower, to accredited
investors only, under Regulation S and/or Rule 506 of Regulation D of the
Securities Act, as amended, on a “best efforts $2,000,000 maximum” basis, which
may be increased without notice to investors (the “Maximum Offering”).

D. There is no escrow agent in this offering and moneys will not be held in any
segregated or secured account pending acceptance or rejection.  Accordingly,
there is also no minimum offering amount and your funds reflecting the Purchase
Price (as defined herein) will become immediately available for use by the
Borrower and susceptible to rights of third party creditors without
protection.  Purchasers and third party agents will not have an opportunity to
approve of a Closing/subscription acceptance, or to request refund of any moneys
submitted to the Borrower until such time as subscriptions are accepted or
rejected or a Termination Date (as defined herein) occurs. Purchasers
acknowledge and agree that their subscriptions are irrevocable and binding
commitments on the part of the Purchaser and that once their funds have been
tendered with the appropriate subscription documents the Borrower may utilize
and disburse funds and conduct a Closing and issue to Purchasers their
respective Securities without any advanced consent or notice to Purchasers.  The
Borrower may reject any subscriptions in whole or in part for any reason or for
no reason to return funds to the Purchaser to the extent of such non accepted
funds, or, retains the right to hold the same for acceptance or rejection at a
future closing, until termination of the offering, at which time, any unused
subscription funds shall be returned to Purchaser.
 
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the Company and each Purchaser agree as follows:

 
 

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AGREEMENT

           1.           PURCHASE AND SALE OF UNITS.

           1.1           Purchase and Sale.  In reliance upon the
representations and warranties of the Borrower and each Purchaser contained
herein and subject to the terms and conditions set forth herein, at Closing,
each Purchaser shall purchase, and the Borrower shall sell and issue to each
Purchaser, Notes and Warrants comprising the Units, at a negotiated purchase
price of face value, the Principal Amount of Notes and corresponding Warrants
set forth on the signature page annexed to the end of this Agreement as executed
by such Purchaser (the “Purchaser Signature Page”), issued in such Purchaser’s
name, at a purchase price of $50,000 per Unit (the “Purchase Price”). Partial
Units may be accepted at the discretion of the

2.           CLOSING.

           2.1           Date and Time.  The sale of Units will take place in
one or more closings (“Closing”), subject to the satisfaction of all the parties
hereto of their obligations herein.  The Purchasers shall submit an executed
copy of this Agreement to the Borrower along with the Purchase Price by bank
wire (or, with the consent of Borrower, by check) directly to the Borrower.  The
Closing of the sale of Units contemplated by this Agreement shall take place
from time to time as subscriptions are received, without any consent of, or
notice to, Purchasers.  Subscriptions that are not accepted will be returned
with any funds (less wire fees).  The Closing shall take place at the offices of
the Borrower (each, a “Closing Date”) on or before April 15, 2015, unless
otherwise extended by the Borrower up to a maximum of 30 days (the “Termination
Date”).

           2.2           No Escrow Agent.  There is no escrow agent and no
minimum offering amount.  Purchasers understand and acknowledge that the
Borrower may or may not raise capital other than their own subscription and,
that the Borrower may accept subscriptions from Purchasers at any
time.  Purchasers acknowledge and agree that their subscriptions are irrevocable
and binding commitments on the part of the Purchaser and that once their funds
have been tendered to the Borrower with the appropriate subscription documents
and their subscription received.  The Borrower may reject any subscriptions in
whole or in part for any reason or for no reason and shall return funds to the
Purchaser to the extent of such non accepted funds, or, retains the right to
hold the same for acceptance or rejection at a future closing, until the
Termination Date of the offering, at which time, any unused subscription funds
shall be returned to Purchaser.
 
3.           REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
 
           As a material inducement to each Purchaser to enter into this
Agreement and to purchase the Units the Borrower represents and warrants that
the following statements are true and correct in all material respects as of the
date hereof and will be true and correct in all material respects at Closing,
except as expressly qualified or modified herein.  All references in this
Section 3 to the Notes, Conversion Shares, Warrants or Warrant Shares shall be
collectively referred to as the “Securities” unless the context requires
otherwise.
 
           3.1           Organization and Good Standing.  The Borrower is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
enter into and perform its obligations under this Agreement, and to own its
properties and to carry on its business in all jurisdictions as presently
conducted and as proposed to be conducted.  The Borrower and its subsidiaries
have all government and other licenses and permits and authorizations to do
business in all jurisdictions where their activities require such license,
permits and authorizations, except where failure to obtain any such license,
permit or authorization will not have a Material Adverse Effect, as defined
herein.
 
           3.2           Capitalization.  As of March 26, 2015, the Borrower is
authorized to issue 300,000,000 shares of Common Stock, of which, 18,476,774,
shares were issued and outstanding, and 4,299,081 authorized Series C Preferred
Stock of which 3,740,729 were issued and outstanding (i.e. 33,439,690shares of
common stock issued and outstanding assuming the exercise of all Series C
Preferred Stock and Warrants. All outstanding shares of the Borrower’s capital
stock have been duly authorized and validly issued, and are fully paid,
nonassessable, and free of any preemptive rights. The Company has no convertible
debt outstanding as of March 1, 2015.  There is only one class and series of
common stock of the Borrower, without any special series, rights, preferences or
designations assigned to any particular shares of common stock. The Borrower
does not have any outstanding notes, convertible debt, derivative securities or
notes other than as specifically set forth in the SEC Reports.

 
 

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           3.3           Authorization and Enforcement.  This Agreement, the
Note, and Warrants and any other agreements delivered together with this
Agreement or in connection herewith (collectively “Transaction Documents”) have
been duly authorized, executed and delivered by the Borrower and are valid and
binding agreements of the Borrower enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.  The Borrower
has full corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform its obligations thereunder. The Borrower
has calculated the average percentage rate and compensation given to Purchaser
and has determined that the interest rate offered hereby does not violate the
law of the state of New York or Delaware and is fully enforceable. The Borrower
understands that Purchaser has relied on the foregoing representation and
warranties as well as all other representations and warranties of the Borrower
herein in making an investment decision.

                           3.4           Reservation and Valid Issuance of
Securities.  The Notes and Warrants have been duly and validly authorized and
delivered and are fully enforceable as against the Company. The Company has
reserved 1.5 times (150%) of the number of shares into which the Notes are
initially convertible (the “Conversion Shares”) and for which the Warrants are
initially exercisable, and shall increase the amount of shares reserved for
issuance in the event of any adjustment required to satisfy the Note conversion
or Warrant exercise terms from time to time.  The Conversion Shares and the
shares of Common Stock issuable upon the conversion of the Warrant (the “Warrant
Shares”) issuable upon conversion of the Notes or exercise of the Warrants have
been duly and validly authorized and, upon issuance upon conversion of the Notes
or due exercise of the Warrant, will be validly issued, fully paid and
non-assessable.  The Conversion Shares, upon issuance in connection with
conversion of the Note are, and the Warrant Shares, upon issuance in accordance
with the Warrants will be, free and clear of any security interests, liens,
claims or other encumbrances, other than restrictions upon transfer under
federal and state securities laws.  The shares of each Subsidiary are duly
authorized, validly issued, fully paid and non assessable and held by the
Borrower which has sole, and unencumbered marketable title and is the sole
owner.

           3.5           No Conflict, Breach, Violation or Default; Third Party
Consents.  The execution, delivery and performance of the Transaction Documents
by the Borrower and the issuance and sale of the Securities will not conflict
with or result in a breach or violation of any of the terms and provisions of,
or constitute a default under (i) the Borrower’s Articles of Incorporation or
the Borrower’s Bylaws, both as in effect on the date hereof (collectively, the
“Company Documents”), or (ii) any statute, rule, regulation or order of any
governmental agency, self regulatory agency, securities regulatory or insurance
regulatory agency or body or any court, domestic or foreign, having jurisdiction
over the Borrower or any of its assets or properties, or (iii) any material
agreement or instrument to which the Borrower is a party or by which the
Borrower is bound or to which any of its assets or properties is subject; except
in the case of each of clauses (ii) and (iii), such as could not, individually
or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.  No approval of or filing with any governmental authority is
required for the Borrower to enter into, execute or perform this Agreement or
any Transaction Document.

           3.6           No Material Adverse Change.  Since December 31, 2014,
except as identified and described in the SEC Reports (as defined below), there
has not been:

                                (i)           any change in the assets,
liabilities, financial condition or operating results of the Borrower from that
reflected in the financial statements included in the Borrower’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014 except for changes
in the ordinary course of business which have not had and could not reasonably
be expected to have a material adverse effect on the Borrower’s assets,
properties, financial condition, operating results or business of the Borrower
taken as a whole other than an effect primarily or proximately resulting from
(A) changes in general economic or market conditions affecting the industry
generally in which the Borrower operates, which changes do not
disproportionately affect the Borrower as compared to other similarly situated
participants in the industry in which the Borrower operates; (B) changes in
applicable law or GAAP; and (C) acts of terrorism, war or natural disasters
which do not disproportionately affect the Borrower (as such business is
presently conducted) (a “Material Adverse Effect”), individually or in the
aggregate;

 
 

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                                (ii)           any declaration or payment of any
dividend, or any authorization or payment of any distribution, on any of the
capital stock of the Borrower, or any redemption or repurchase of any securities
of the Borrower;

                                (iii)           any material damage, destruction
or loss, whether or not covered by insurance, to any assets, licenses,
government permits, self regulatory agency permit or license, or properties of
the Borrower;

                                (iv)           any waiver, not in the ordinary
course of business, by the Borrower of a material right or of a material debt
owed to it;

                                (v)           any satisfaction or discharge of
any lien, claim or encumbrance or payment of any obligation by the Borrower,
except in the ordinary course of business and which has not had a Material
Adverse Effect;

                                (vi)           any change or amendment to
borrower documents, or material change to any material contract or arrangement
by which the Borrower is bound or to which any of its  assets or properties is
subject;

                                (vii)           any material labor difficulties,
labor disputes, non-compete or similar disputes, or labor union organizing
activities with respect to employees of the Borrower;

                                (viii)           any material transaction
entered into by the Borrower other than in the ordinary course of business;

                                (ix)           the loss of the services of any
key employee, salesperson, or material change in the composition or duties of
the senior management of the Company;
 
                                (ix)           the loss or threatened loss of
any customer which has had or could reasonably be expected to have a Material
Adverse Effect;

                                (x)           any default of any indebtedness
or, to the knowledge of the Borrower, breach of contract agreement, in each case
with aggregate liabilities of greater than $50,000; or

                                (xi)           any other event or condition of
any character that has had or could reasonably be expected to have a Material
Adverse Effect.

                           3.7           SEC Reports and Financial Statements.

                           3.7.1           The Borrower has made available to
each Purchaser through the SEC’s EDGAR system accurate and complete copies
(excluding copies of exhibits) of each report, registration statement, and
definitive proxy statement filed by the Borrower with the United States
Securities and Exchange Commission (“SEC”) since September 30, 2014
(collectively, the “SEC Reports”).  All statements, reports, schedules, forms
and other documents required to have been filed by the Borrower with the SEC
have been so filed.  As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the SEC Reports complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended (the
“Securities Act”), or the Securities Exchange Act of 1934 (the “1934 Act”), as
amended; and (ii) none of the SEC Reports 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.

                           3.7.2           Except for pro forma financial
statements, if any, the audited financial statements and unaudited interim
financial statements contained in the SEC Reports: (i) complied as to form in
all material respects with the published rules and regulations of the SEC
applicable thereto at the time of filing and as of the date of each Closing;
(ii) were prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered (except as may be indicated in the notes to such
financial statements and, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to normal and recurring year-end audit
adjustments which will not, individually or in the aggregate, be material in
amount); and (iii) fairly present, in all material respects, the financial
position of the Borrower as of the respective dates thereof and the results of
operations of the Borrower for the periods covered thereby, subject, in the case
of unaudited statements, to normal, immaterial, year-end audit adjustments. All
adjustments considered necessary for a fair presentation of the financial
statements have been included. Purchaser acknowledges that the Borrower has
restated its Quarterly Reports on Form 10-Q for the periods ended December 31,
2012 and March 31, 2013, and did not timely file its Quarterly Report on Form
10-Q for the period ended June 30, 2013.

 
 

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                           3.8           Securities Law Compliance.  Assuming
the accuracy of the representations and warranties of each Purchaser set forth
in Section 4 of this Agreement, the offer and sale of the Securities comprising
the Securities will constitute an exempted transaction under the Securities Act,
and registration of the Conversion Shares, Warrants or Warrant Shares under the
Securities Act for issuance herein is not required.  The Borrower shall make
such filings as may be necessary to comply with the Federal securities laws and
the “blue sky” laws of any state in connection with the offer and sale of the
Securities, which filings will be made in a timely manner.

                           3.9           Tax Matters.  The Borrower has timely
prepared and filed all tax returns required to have been filed by the Borrower
with all appropriate governmental agencies and timely paid all taxes shown
thereon or otherwise owed by it.  The charges, accruals and reserves on the
books of the Borrower in respect of taxes for all fiscal periods are adequate in
all material respects, and there are no material unpaid assessments against the
Borrower nor, to the Borrower’s Knowledge, any basis for the assessment of any
additional taxes, penalties or interest for any fiscal period or audits by any
federal, state or local taxing authority except for any assessment which is not
material to the Borrower, taken as a whole.  All taxes and other assessments and
levies that the Borrower is required to withhold or to collect for payment have
been duly withheld and collected and paid to the proper governmental entity or
third party when due.  There are no tax liens or claims pending or, to the
Borrower’s Knowledge, threatened against the Borrower or any of its assets or
property.  There are no outstanding tax sharing agreements or other such
arrangements between the Borrower or other corporation or entity.  For the
purposes of this agreement, “Company’s Knowledge” means the actual knowledge of
the executive officers (as defined in Rule 405 under the Securities Act) of the
Borrower.

                           3.10           Title to Properties.  Except as
disclosed in the SEC Reports, the Borrower has good and marketable title to all
real properties and all other properties and assets owned by it, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Reports, the Borrower
holds any leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or
currently planned to be made thereof by them.

                           3.11           Intellectual Property.

Except as provided in the SEC Reports:

                                (i)           All intellectual property of the
Borrower or its Subsidiaries is currently in compliance with all legal
requirements (including timely filings, proofs and payments of fees) and is
valid and enforceable.  No intellectual property of the Borrower which is
necessary for the conduct of Company’s businesses as currently conducted has
been or is now involved in any cancellation, dispute or litigation, and, to the
Borrower’s Knowledge, no such action is threatened.

                                (ii)           All of the licenses and
sublicenses and consent, royalty or other agreements concerning intellectual
property which are necessary for the conduct of the Borrower’s business as
currently conducted to which the Borrower is a party or by which any of its
assets are bound (other than generally commercially available, non-custom,
off-the-shelf software application programs having a retail acquisition price of
less than $10,000 per license) (collectively, “License Agreements”) are valid
and binding obligations of the Borrower and, to the Borrower’s Knowledge, the
other parties thereto, enforceable in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally, and there exists no
event or condition which will result in a material violation or breach of or
constitute (with or without due notice or lapse of time or both) a default by
the Borrower under any such License Agreement.

                                (iii)           The Borrower owns or has the
valid right to use all of the intellectual property that is necessary for the
conduct of the Borrower’s business as currently conducted and for the ownership,
maintenance and operation of the Borrower’s properties and assets, free and
clear of all liens, encumbrances, adverse claims or obligations to license all
such owned intellectual property and confidential information other than
licenses entered into in the ordinary course of the Borrower’s business.  The
Borrower has a valid and enforceable right to use all third party intellectual
property used or held for use in the business of the Borrower.

 
 

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                                (iv)           To the Borrower’s Knowledge, the
conduct of the Borrower’s business as currently conducted does not infringe or
otherwise impair or conflict with (collectively, “Infringe”) any intellectual
property rights of any third party or any confidentiality obligation owed to a
third party, and, to the Borrower’s Knowledge, the intellectual property and
Confidential Information of the Borrower which are necessary for the conduct of
the Borrower’s business as currently conducted are not being Infringed by any
third party.  There is no litigation or order pending or outstanding or, to the
Borrower’s Knowledge, threatened or imminent, that seeks to limit or challenge
or that concerns the ownership, use, validity or enforceability of any
intellectual property or confidential information of the Borrower and the
Borrower’s use of any intellectual property or confidential information owned by
a third party, and, to the Borrower’s Knowledge, there is no valid basis for the
same.

                                (v)           The consummation of the
transactions contemplated hereby and by the other Transaction Documents will not
result in the alteration, loss, impairment of or restriction on the Borrower’s
ownership or right to use any of the intellectual property or confidential
information which is necessary for the conduct of the Borrower’s business as
currently conducted.

                                (vi)           The Borrower has taken reasonable
steps to protect the Borrower’s rights in its intellectual property and
confidential information.  Each employee, consultant and contractor who has had
access to Confidential Information which is necessary for the conduct of
Company’s business as currently conducted has executed an agreement to maintain
the confidentiality of such Confidential Information and has executed
appropriate agreements that are substantially consistent with the Borrower’s
standard forms thereof, except where the failure to do so has not had and could
not reasonably be expected to have a Material Adverse Effect, individually or in
the aggregate.  Except under confidentiality obligations, there has been no
material disclosure of any Confidential Information to any third party.

                           3.12           Environmental Matters.  To the
Borrower’s Knowledge, the Borrower (i) is not in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) does not own or operate any real property contaminated with any
substance that is subject to any Environmental Laws, (iii) is not liable for any
off-site disposal or contamination pursuant to any Environmental Laws, or (iv)
is not subject to any claim relating to any Environmental Laws, which violation,
contamination, liability or claim has had or could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate; and there is
no pending or, to the Borrower’s Knowledge, threatened investigation that might
lead to such a claim.

                            3.13           Litigation.  Except as disclosed in
the SEC Reports, there are no pending material actions, suits or proceedings
against or affecting the Borrower, or any of its properties; and to the
Borrower’s Knowledge, no such actions, suits or proceedings are threatened or
contemplated against the Borrower.

                           3.14           No Directed Selling Efforts or General
Solicitation.  Neither the Borrower nor any Person, as defined below, acting on
its behalf has conducted any general solicitation or general advertising (as
those terms are used in Regulation D) in connection with the offer or sale of
any of the Securities.  “Person” means any individual, corporation, company,
limited liability company, partnership, limited liability partnership, trust,
estate, proprietorship, joint venture, association, organization or entity.

                           3.15           No Integrated Offering.  Neither the
Borrower nor any of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any Company security or
solicited any offers to buy any security, under circumstances that would
adversely affect reliance by the Borrower on Section 4(a)(2) for the exemption
from registration for the transactions contemplated hereby or would require
registration of the Securities under the Securities Act.  For purposes of this
Agreement, “Affiliate” means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person.

                           3.16           Questionable Payments. To the
Borrower’s Knowledge, none of its current or former stockholders, directors,
officers, employees, agents or other Persons acting on behalf of the Borrower,
has on behalf of the Borrower or in connection with its business: (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (iii) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (iv) made any false or fictitious entries
on the books and records of the Borrower; or (v) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment of any
nature.

 
 

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                           3.17           Transactions with Affiliates.  Except
as disclosed in the SEC Reports, none of the officers or directors of the
Borrower and, to the Borrower’s Knowledge, none of the employees of the Borrower
is presently a party to any transaction with the Borrower (other than as holders
of stock options and/or warrants, and 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, or otherwise requiring payments to or from any officer,
director or such employee or, to the Borrower’s Knowledge, any entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

                           3.18           Internal Controls.  Except as
otherwise set forth in the SEC Reports, the Borrower is in material compliance
with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to
the Borrower except where such noncompliance could not have or reasonably be
expected to result in a Material Adverse Effect.  Except as set forth in the SEC
Reports, the Borrower maintains, and will use commercially reasonable best
efforts to 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 and to
maintain asset accountability both in conformity with GAAP and the applicable
provisions of the 1934 Act, (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. Except as set forth in the SEC Reports, the Borrower has
established disclosure controls and procedures (as defined in the 1934 Act Rules
13a-14 and 15d-14) and designed such disclosure controls and procedures to
ensure that material information relating to the Borrower, including the
subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Borrower’s most recently
filed period report under the 1934 Act, as the case may be, is being
prepared.  The Borrower’s certifying officers have evaluated the effectiveness
of the Borrower’s controls and procedures as of the end of the period covered by
the most recently filed periodic report under the 1934 Act (such date, the
“Evaluation Date”).  The Borrower presented in its most recently filed periodic
report under the 1934 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 significant changes in the Borrower’s internal controls (as such term is
defined in Item 308 of Regulation S-K for smaller reporting companies) or, to
the Borrower’s Knowledge, in other factors that could significantly affect the
Borrower’s internal controls.

                           3.19           Disclosures.  Neither the Borrower nor
any Person acting on any of their behalf has provided the Purchasers or their
agents or counsel with any information that constitutes or might constitute
material, non-public information.  The written materials delivered to the
Purchasers in connection with the transactions contemplated by the Transaction
Documents do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.

           3.20           No Market Manipulation.  The Borrower and its
Affiliates have not taken, and will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Securities or affect the price at which the Securities may
be issued or resold.

           3.21           Information Concerning Borrower.  The SEC Reports and
Transaction Documents contain all material information relating to the Borrower
and its operations and financial condition as of their respective dates which
information is required to be disclosed therein.  Since the date of the
financial statements included in the Reports, and except as modified in the
Transaction Documents, or in the Schedules hereto, there has been no Material
Adverse Effect relating to the Borrower's business, financial condition or
affairs not disclosed in the SEC Reports. The SEC Reports do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, taken as a whole,
not misleading in light of the circumstances when made.

           3.22           Stop Transfer.  The Borrower will not issue any stop
transfer order or other order impeding the sale, resale or delivery of any of
the Securities, except as may be required by any applicable federal or state
securities laws and unless contemporaneous notice of such instruction is given
to the affected Purchaser.

 
 

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           3.23           No General Solicitation.  Neither the Borrower, nor
any of its Affiliates, nor to Borrower’s Knowledge, any person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act) in
connection with the offer or sale of the Securities

           3.24           Dilution.   The Borrower's executive officers and
directors understand the nature of the Securities being sold hereby and
recognize that the issuance of the Securities will have a potential dilutive
effect on the equity holdings of other holders of the Borrower’s equity or
rights to receive equity of the Borrower.  The Board of Directors of the
Borrower has concluded, in its good faith business judgment that the issuance of
the Securities is in the best interests of the Borrower.  The Borrower
specifically acknowledges that its obligation to issue the Conversion Shares
upon conversion of the Notes, and Warrant Shares upon exercise of the Warrants,
is binding upon the Borrower and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Borrower or parties entitled to receive equity of the Borrower.

           3.25           Foreign Corrupt Practices.  Neither the Borrower, nor
to the Knowledge of the Borrower, any agent or other person acting on behalf of
the Borrower, 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 Borrower (or made by any person
acting on its behalf of which the Borrower is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

4.           REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER.

           Each Purchaser individually and not jointly hereby represents
warrants and covenants with the Borrower as follows.  For avoidance of doubt,
these warranties and representations are made to the Borrower as well as to
their agents and representatives and affiliates and other members of the selling
group (if any) and their representatives and affiliates, as third party
beneficiaries hereto:

           4.1           Legal Power.  Each Purchaser has the requisite
individual, corporate, partnership, limited liability company, trust, or
fiduciary power, as appropriate, and is authorized, if such Purchaser is a
corporation, partnership, limited liability company, or trust, to enter into
this Agreement, to purchase the Securities hereunder, and to carry out and
perform its obligations under the terms of this Agreement or any other
Transaction Documents to which it is a party.

           4.2           Due Execution.  The execution and performance of the
terms under this Agreement and the Accredited Investor Questionnaire in the form
annexed hereto as Exhibit C (the “Questionnaire”) and Purchaser Signature Page
hereto, have been duly authorized, if such Purchaser is a corporation,
partnership, limited liability company, trust or fiduciary, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Borrower, this Agreement will be a valid and binding agreement of such
Purchaser.

                           4.3           Access to Information.  Each Purchaser
understands that an investment in the Securities involves a high degree of risk
and long term or permanent illiquidity, including, risk of loss of their entire
investment.  Each Purchaser also understands that the Borrower has limited
capital and is not profitable and will likely not be able to repay the Notes,
and is dependent on a conversion event to satisfy its obligations
thereunder.  Each Purchaser represents that such Purchaser has been given full
and complete access to the Borrower for the purpose of obtaining such
information as such Purchaser or its qualified representative has reasonably
requested in connection with the decision to purchase the Securities.  Each
Purchaser represents that such Purchaser has received and reviewed copies of the
SEC Reports.  Each Purchaser represents that such Purchaser has been afforded
the opportunity to ask questions of the officers of the Borrower regarding its
business prospects and the Securities, all as such Purchaser or such Purchaser’s
qualified representative have found necessary to make an informed investment
decision to purchase the Securities.

 
 

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                           4.4           Restricted Securities.

                                4.4.1           Each Purchaser has been advised
that none of the Securities have been registered under the Securities Act or any
other applicable securities laws and that Securities are being offered and sold
pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation
D and/or Regulation S thereunder, and that the Borrower’s reliance upon Section
4(a)(2) and/or Rule 506 of Regulation D and/or Regulation S is predicated in
part on such Purchaser representations as contained herein (including, for
avoidance of doubt, the Questionnaire).  Each Purchaser acknowledges that the
Securities will be issued as “restricted securities” as defined by Rule 144
promulgated pursuant to the Securities Act.  None of the Securities may be
resold in the absence of an effective registration thereof under the Securities
Act and applicable state securities laws unless, in the opinion of counsel
reasonably satisfactory to the Borrower, an applicable exemption from
registration is available.

                                4.4.2           Each Purchaser represents that
such Purchaser is acquiring the Securities for such Purchaser’s own account, and
not as nominee or agent, for investment purposes only and not with a view to, or
for sale in connection with, a distribution, as that term is used in Section
2(11) of the Securities Act, in a manner which would require registration under
the Securities Act or any state securities laws.

                                4.4.3           Each Purchaser understands and
acknowledges that the certificates representing the Notes, Conversion Shares,
Warrants and, if issued, the Warrant Shares, will bear substantially the
following legend:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES, (ii) THE BORROWER RECEIVES AN OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE BORROWER STATING THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION, OR (iii) THE BORROWER OTHERWISE SATISFIES ITSELF THAT
SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.”

                                4.4.4           Each Purchaser acknowledges that
an investment in the Securities is not liquid and is transferable only under
limited conditions.  Each Purchaser acknowledges that such securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.  Each Purchaser is
aware of the provisions of Rule 144 promulgated under the Securities Act, which
permits limited resale of restricted securities subject to the satisfaction of
certain conditions and that such Rule is not now available and, in the future,
may not become available for resale of any of the Securities.  Each Purchaser is
an “accredited investor” as defined under Rule 501 under the Securities
Act.  Each Purchaser understands and acknowledges that the Borrower was once a
“shell” company and accordingly, if it becomes delinquent in filing its Exchange
Act reports, any Conversion Shares and Warrant Shares will become illiquid until
such time as the Company becomes current in its Exchange Act reports.

                                4.4.5           The representations made by each
Purchaser on the Questionnaire and Signature Page are true and correct.

                           4.5           Purchaser Sophistication and Ability to
Bear Risk of Loss.  Each Purchaser acknowledges that it is able to protect its
interests in connection with the acquisition of the Securities and can bear the
economic risk of investment in such securities without producing a material
adverse change in such Purchaser’s financial condition.  Each Purchaser, either
alone or with such Purchaser’s representative(s), otherwise has such knowledge
and experience in financial or business matters that such Purchaser is capable
of evaluating the merits and risks of the investment in the Securities.

                           4.6           Purchases by Groups.  Each Purchaser
represents, warrants and covenants that it is not acquiring the Securities as
part of a group within the meaning of Section 13(d)(3) of the 1934 Act or
otherwise purchasing with intent to control voting over the Borrower.

 
 

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                           4.7           Independent Investigation.  Each
Purchaser in making his decision to purchase the Securities herein, has relied
solely upon an independent investigation made by him and his legal, tax and/or
financial advisors and, is not relying upon any oral representations of the
Borrower.

                           4.8           No Advertising.  Each Purchaser has not
received any general solicitation or advertising regarding the offer of the
Units or any of the Securities.
 
                           4.9           Certain Trading Activities.  Each
Purchaser has not directly or indirectly, nor has any person acting on behalf of
or pursuant to any understanding with such Purchaser, engaged in any
transactions in the securities of the Borrower (including, without limitation,
any short sales involving the Borrower’s securities) since the time that such
Purchaser was first contacted by the Borrower regarding the investment in the
Borrower contemplated by this Agreement.  Each Purchaser covenants that neither
it nor any person acting on its behalf or pursuant to any understanding with it
will engage in any transactions in the securities of the Borrower (including
short sales) prior to the time that the transactions contemplated by this
Agreement are publicly disclosed.

                           4.11           Regulation S; Non-U.S. Person
Status.  For purposes of compliance with the Regulation S exemption for the
offer and sale of the Securities to non-U.S. Persons, if the Purchaser is not a
“U.S. Person,” as such term is defined in Rule 902(k) of Regulation S, the
Purchaser represents and warrants they are a person or entity that is outside
the United Sates, and further represents and warrants as follows:

4.11.1                      The Purchaser is not acquiring the Securities for
the account or benefit of a U.S. Person.

4.11.2                      If the Purchaser is a legal entity, it has not been
formed specifically for the purpose of investing in the Borrower.

4.11.3                      The Purchaser hereby represents that he, she or it
has satisfied and fully observed the laws of the jurisdiction in which he, she
or it is located or domiciled, in connection with the acquisition of the
Securities, including (i) the legal requirements of the Purchaser’s jurisdiction
for the acquisition of the Securities, (ii) any foreign exchange restrictions
applicable to such acquisition, (iii) any governmental or other consents that
may need to be obtained, and (iv) the income tax and other tax consequences, if
any, which may be relevant to the holding, redemption, sale, or transfer of the
Securities; and further, the Purchaser agrees to continue to comply with such
laws as long as he, she or it shall hold the Investment Securities.

4.11.4                      To the knowledge of the Purchaser, without having
made any independent investigation, neither the Borrower nor any person acting
for the Borrower, has conducted any “directed selling efforts” in the United
States as the term “directed selling efforts” is defined in Rule 902 of
Regulation S, which, in general, means any activity undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning the
marketing in the United States for any of the Securities being offered.  Such
activity includes, without limitation, the mailing of printed material to
investors residing in the United States, the holding of promotional seminars in
the United States, and the placement of advertisements with radio or television
stations broadcasting in the United States or in publications with a general
circulation in the United States, which discuss the offering of the Investment
Securities.  To the knowledge of the Purchaser, the Securities were not offered
to the undersigned through, and the undersigned is not aware of, any form of
general solicitation or general advertising, including without limitation, (i)
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

4.11.5                      The Purchaser will offer, sell or otherwise transfer
the Securities, only (A) pursuant to a registration statement that has been
declared effective under the Securities Act, (B) pursuant to offers and sales
that occur outside the United States within the meaning of Regulation S in a
transaction meeting the requirements of Rule 904 (or other applicable Rule)
under the Securities Act, or (C) pursuant to another available exemption from
the registration requirements of the Securities Act, subject to the Borrower’s
right prior to any offer, sale or transfer pursuant to clauses (B) or (C) to
require the delivery of an opinion of counsel, certificates or other information
reasonably satisfactory to the Borrower for the purpose of determining the
availability of an exemption.

4.11.6                      The Purchaser will not engage in hedging
transactions involving the Securities unless such transactions are in compliance
with the Securities Act.

 
 

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4.11.7                      The Purchaser represents and warrants that the
undersigned is not a citizen of the United States and is not, and has no present
intention of becoming, a resident of the United States (defined as being any
natural person physically present within the United States for at least 183 days
in a 12-month consecutive period or any entity who maintained an office in the
United States at any time during a 12-month consecutive period). The Purchaser
understands that the Borrower may rely upon the representations and warranty of
this paragraph as a basis for an exemption from registration of the Securities
under the Securities Act of 1933, as amended, and the provisions of relevant
state securities laws.

                           4.12           Public Statements.  The Purchaser
agrees not to issue any public statement with respect to the Offering,
Subscriber’s investment or proposed investment in the Company or the terms of
any agreement or covenant between them and the Borrower without the Borrower’s
prior written consent, except such disclosures as may be required under
applicable law.

                           4.13           Acceptance or Rejection.  The
Subscriber understands, acknowledges and agrees with the Company that this
subscription may be rejected, in whole or in part, by the Company, in the sole
and absolute discretion of the Company, at any time before any Closing
notwithstanding prior receipt by the Subscriber of notice of acceptance of the
Subscriber’s subscription.

                           4.14           Confidential.  Each Purchaser
acknowledges that the information made available to the Purchaser other than the
SEC Reports is confidential and non-public and agrees that all such information
shall be kept in confidence by the Purchaser and neither used by the Purchaser
for the Purchaser’s personal benefit (other than in connection with this
subscription) nor disclosed to any third party for any reason, notwithstanding
that a Purchaser’s subscription may not be accepted by the Company; provided,
however, that (a) the Purchaser may disclose such information to its affiliates
and advisors who may have a need for such information in connection with
providing advice to the Purchaser with respect to its investment in the Borrower
so long as such affiliates and advisors have an obligation of confidentiality,
and (b) this obligation shall not apply to any such information that (i) is part
of the public knowledge or literature and readily accessible at the date hereof,
(ii) becomes part of the public knowledge or literature and readily accessible
by publication (except as a result of a breach of this provision) or (iii) is
received from third parties without an obligation of confidentiality (except
third parties who disclose such information in violation of any confidentiality
agreements or obligations, including, without limitation, any subscription or
other similar agreement entered into with the Borrower).
 
                           4.15           The Purchaser understands that the
Notes and Warrants being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgements 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.

5.           COVENANTS OF BORROWER RELATING TO NOTE AND WARRANT.

                           5.1           Reservation of Shares.  The Borrower
hereby covenants to maintain at all times while the Notes or Warrants are
outstanding, reserved and authorized for issuance upon exercise of the Warrants
or Conversion Shares, such number of Warrant Shares and Conversion Shares as
equals 150% of the amount of shares that such Notes and Warrants are convertible
into or exchangeable for at any time and from time to time.  The Borrower hereby
further agrees to take all further acts, including amending its charter or
amending any filing with any exchange or quotation service in order to
effectuate the foregoing.

           (b)           The Company covenants and agrees with the Purchasers,
commencing after the initial Closing and continuing for so long as Purchasers
own at least 40% of Notes and Warrants outstanding, or 40% of the Conversion
Shares and Warrant Shares (as adjusted for stock splits and similar
adjustments), the Company may not take the following actions without consent of
the Purchasers:
 

 
 

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                                (i)           guarantee any indebtedness of any
person or entity other than the Company or its wholly owned subsidiaries not in
the ordinary course of business;
 
(ii)           make any investment in securities other than US money market
funds or FDIC insured CD accounts, provided, however, that nothing contained
herein shall prevent the Company from entering into strategic acquisitions
and/or joint ventures with any other person or entity whereby the Company may be
required to acquires equity interests relating to such person or entity;
 
(iii)           enter into or modify any interested party transaction with any
affiliate;
 
(iv)           make a material change in the principal business of the Company;
 
(vii)           sell, assign, license, lease, pledge or encumber material
technology or intellectual property except in the ordinary course of business;
 
(viii) decide to liquidate, dissolve, wind up, merge or consolidate the Company;
or
 
(ix)  sell, lease, transfer, license or dispose of substantially all of the
assets of the Company.
 
                           5.2           Payment for legal Opinions and Removal
of Legends.  The Company shall cover all costs associated with removal of any
securities act restrictive legends, including, without limitation, the cost of
replacement certificates and opinion or letter of Company counsel to the
transfer agent, as well as delivery costs, for all Shares and Warrant Shares.
[DISCUSS]

                           5.3           Maximum Payments.  Nothing herein shall
be deemed to require that the Borrower pay any interest or make any payment that
exceeds the maximum amount permissible by law.  The Borrower has covenanted that
it has calculated the total interest and other payments payable hereunder and,
as a condition to closing, has determined that the same does not exceed the
legal limits provided by law. In the event that the Borrower determines that a
payment may exceed legal limits for any reason, the Borrower shall repay that
amount of Note or make such payments to the maximum amount that law would permit
or permit the holder of the Notes to convert in whole or in part at the then
prevailing rate.

           6.           COVENANTS OF THE BORROWER AND PURCHASER
 
           6.1           Use of Proceeds.  The Borrower shall pay to their stock
transfer agent the cost of all Warrant Share certificates and Conversion Share
certificates anticipated to be issued. The Borrower intends to employ the
remaining net proceeds (i.e. after all legal costs, offering costs, etc.) from
the purchase and sale of the Units for purposes of working capital, marketing,
acquisitions, expansion and to further the operations of the Borrower and will
not use such proceeds to make payments or repayments to Company insiders or
affiliates or related persons.

                           6.2           Piggy Back Registration Rights.  At any
time the Conversion Shares or Warrant Shares (or right to obtain Warrant Shares
pursuant to the terms of the Warrant) (collectively, the “Registrable
Securities”) are owned by a Purchaser and there is not an effective registration
statement covering all of the Registrable Securities, and if the Company shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the Act, of any
of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Act) or their then equivalents (the “Registration
Statement”) relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans, then
the Company shall deliver to each Purchaser a written notice of such
determination and, if within fifteen (15) days after the date of the delivery of
such notice, any such Purchaser shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Purchaser requests to be registered; provided, however, that
Registrable Securities may be reduced on a pro rata basis with such other
securities being registered on the applicable registration statement if and to
the extent that the underwriter(s) associated with the offering which is the
subject of the registration statement believes, in good faith, that the
inclusion of such Registrable Securities will have an adverse effect on the sale
of the securities for which such registration statement was filed, and
further provided, however, that the Company shall not be required to register
any Registrable Securities pursuant to this Section 6.2  that are eligible for
resale pursuant to Rule 144 promulgated by the SEC pursuant to the Act or that
are the subject of a then effective registration statement; provided further
that the Borrower’s counsel renders an opinion letter as such in favor of the
Purchaser at Borrower’s expense. If any SEC guidance or FINRA regulation sets
forth a limitation on the number of securities permitted to be registered on a
particular registration statement (and notwithstanding that the Company used
diligent efforts to advocate with the SEC for the registration of all or a
greater portion of Registrable Securities), the number of Registrable Securities
to be registered on such registration statement will be reduced on a pro rata
basis with such other securities being registered on the applicable
registration.

 
 

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                                                6.2.1           Obligations and
Acknowledgements of the Purchasers.  In connection with the registration of the
Registrable Securities pursuant to Section 6.2, each Purchaser shall have the
following obligations and hereby make the following acknowledgements: (a) It
shall be a condition precedent for the Borrower to include the Registrable
Securities in the Registration Statement that each Purchaser wishing to
participate in the Registration Statement (i) shall furnish to the Borrower such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and (ii) shall execute such documents in connection with such registration as
the Borrower may reasonably request; (b) each Purchaser requesting registration
agrees to cooperate with the Borrower in connection with the preparation and
filing of a Registration Statement hereunder, unless such Purchaser has notified
the Borrower in writing of its election to exclude all of its Registrable
Securities from such Registration Statement; and (c) each Purchaser acknowledges
that it may be deemed to be a statutory underwriter within the meaning of the
Securities Act with respect to the Registrable Securities being registered for
resale by it, and if a Purchaser includes Registrable Securities for offer and
sale within a Registration Statement such Purchaser hereby consents to the
inclusion in such Registration Statement of a disclosure to such effect.

                                                 6.2.2           Registration
Process.  In connection with the registration of the Registrable Securities
pursuant to Section 6.2, the Borrower shall:

                           (a)           Prepare and file with the SEC the
Registration Statement and such amendments (including post effective amendments)
to the Registration Statement and supplements to the prospectus included therein
(a “Prospectus”) as the Borrower may deem necessary or appropriate and take all
lawful action such that the Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, not misleading and that the Prospectus forming
part of the Registration Statement, and any amendment or supplement thereto,
does not at any time during the period commencing on the effective date of the
Registration Statement and ending on the date on which all of the Registrable
Securities may be sold to the public without registration under the Securities
Act in reliance on Rule 144 (the “Registration Period”) include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

                           (b)           Comply with the provisions of the
Securities Act with respect to the Registrable Securities covered by the
Registration Statement until the earlier of (i) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by each Purchaser as set forth in the Prospectus forming
part of the Registration Statement or (ii) the date on which the Registration
Statement is withdrawn;

                           (c)           Furnish to each Purchaser and its legal
counsel identified to the Borrower (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Borrower, one copy
of the Registration Statement, each Prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of the Prospectus and all amendments and
supplements thereto and such other documents, as the Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities;

                           (d)           Register or qualify the Registrable
Securities covered by the Registration Statement under such securities or “blue
sky” laws of such jurisdictions as the Purchasers reasonably request, (ii)
prepare and file in such jurisdictions such amendments (including post effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take all such other lawful actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all such other lawful
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Borrower shall not
be required in connection therewith or as a condition thereto to (A) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify, (B) subject itself to general taxation in any such jurisdiction or (C)
file a general consent to service of process in any such jurisdiction;

                           (e)           As promptly as practicable after
becoming aware of such event, notify each Purchaser of the occurrence of any
event, as a result of which the Prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and promptly prepare an amendment to the Registration
Statement and supplement to the Prospectus to correct such untrue statement or
omission, and deliver a number of copies of such supplement and amendment to
each Purchaser as such Purchaser may reasonably request;

 
 

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                           (f)           As promptly as practicable after
becoming aware of such event, notify each Purchaser (or, in the event of an
underwritten offering, the managing underwriters) of the issuance by the SEC of
any stop order or other suspension of the effectiveness of the Registration
Statement and take all lawful action to effect the withdrawal, rescission or
removal of such stop order or other suspension;

                           (g)           Take all such other lawful actions
reasonably necessary to expedite and facilitate the disposition by the Purchaser
of its Registrable Securities in accordance with the intended methods therefor
provided in the Prospectus which are customary under the circumstances; and

                           (h)           Cooperate with the Purchasers to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to the Registration Statement, which
certificates shall, if required under the terms of this Agreement, be free of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any Purchaser may request and
maintain a transfer agent for the Common Stock.

                                                6.2.3           Obligations and
Acknowledgements of the Purchasers.  In connection with the registration of the
Registrable Securities, each Purchaser shall have the following obligations and
hereby make the following acknowledgements:

                           (a)           It shall be a condition precedent to
the obligations of the Borrower to include the Registrable Securities in the
Registration Statement that each Purchaser wishing to participate in the
Registration Statement (i) shall furnish to the Borrower such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and (ii)
shall execute such documents in connection with such registration as the
Borrower may reasonably request.  Prior to the first anticipated filing date of
a Registration Statement, the Borrower shall notify each Purchaser of the
information the Borrower requires from such Purchaser (the “Requested
Information”) if such Purchaser elects to have any of its Registrable Securities
included in the Registration Statement.  If a Purchaser notifies the Borrower
and provides the Borrower the information required hereby prior to the time the
Registration Statement is declared effective, the Borrower will file an
amendment to the Registration Statement that includes the Registrable Securities
of such Purchaser provided, however, that the Borrower shall not be required to
file such amendment to the Registration Statement at any time less than five (5)
business days prior to the effective date.

                           (b)           Each Purchaser agrees to cooperate with
the Borrower in connection with the preparation and filing of a Registration
Statement hereunder, unless such Purchaser has notified the Borrower in writing
of its election to exclude all of its Registrable Securities from such
Registration Statement;

                           (c)           Each Purchaser agrees that, upon
receipt of any notice from the Borrower of the occurrence of any event of the
kind described in Section 6.2.2(e) or 6.2.2(f), such Purchaser shall immediately
discontinue its disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until the
Purchaser’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6.2.2(e) and, if so directed by the Borrower, the
Purchaser shall deliver to the Borrower (at the expense of the Borrower) or
destroy (and deliver to the Borrower a certificate of destruction) all copies in
the Purchaser’s possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice; and

                           (d)           Each Purchaser acknowledges that it may
be deemed to be a statutory underwriter within the meaning of the Securities Act
with respect to the Registrable Securities being registered for resale by it,
and if a Purchaser includes Registrable Securities for offer and sale within a
Registration Statement such Purchaser hereby consents to the inclusion in such
Registration Statement of a disclosure to such effect.
 
 
6.2.4           Expenses of Registration.  All expenses (other than underwriting
discounts and commissions and the fees and expenses of a Purchaser’s counsel)
incurred in connection with registrations, filings or qualifications pursuant to
this Section 6.2, including, without limitation, all registration, listing, and
qualifications fees, printing and engraving fees, accounting fees, and the fees
and disbursements of counsel for the Borrower, shall be borne by the Borrower.

 
 

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6.2.5           Indemnification and Contribution.

                           (a)           Indemnification by the Borrower.  The
Borrower shall indemnify and hold harmless each Purchaser and each underwriter,
if any, which facilitates the disposition of Registrable Securities, and each of
their respective officers and directors and each Person who controls such
underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the 1934 Act (each such Person being sometimes hereinafter referred to as an
“Indemnified Person”) from and against any losses, claims, damages or
liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, not misleading, or arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Borrower hereby agrees to reimburse such Indemnified Person for all
reasonable legal and other expenses incurred by them in connection with
investigating or defending any such action or claim as and when such expenses
are incurred; provided, however, that the Borrower shall not be liable to any
such Indemnified Person in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (i) an untrue
statement or alleged untrue statement made in, or an omission or alleged
omission from, such Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Borrower by such
Indemnified Person expressly for use therein or (ii) in the case of the
occurrence of an event of the type specified in Section 6.2.2(e), the use by the
Indemnified Person of an outdated or defective Prospectus after the Borrower has
provided to such Indemnified Person an updated Prospectus correcting the untrue
statement or alleged untrue statement or omission or alleged omission giving
rise to such loss, claim, damage or liability.

                           (b)           Indemnification by the Purchasers and
Underwriters.  Each Purchaser agrees, as a consequence of the inclusion of any
of its Registrable Securities in a Registration Statement, and each underwriter,
if any, which facilitates the disposition of Registrable Securities shall agree,
severally and not jointly, as a consequence of facilitating such disposition of
Registrable Securities to (i) indemnify and hold harmless the Borrower, its
directors (including any person who, with his or her consent, is named in the
Registration Statement as a director nominee of the Borrower), its officers and
directors who sign any Registration Statement and each Person, if any, who
controls the Borrower within the meaning of either Section 15 of the Securities
Act or Section 20 of the 1934 Act, against any losses, claims, damages or
liabilities to which the Borrower or such other persons may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or Prospectus or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in light of the
circumstances under which they were made, in the case of the Prospectus), not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Borrower by the Purchaser or underwriter expressly for use therein, and (ii)
reimburse the Borrower for any legal or other expenses incurred by the Borrower
in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that such Purchaser shall not be
liable under this Section 6.2.5(b) for any amount in excess of the net proceeds
paid to such Purchaser in respect of Registrable Securities sold by it.

                           (c)           Notice of Claims, etc.  Promptly after
receipt by a Person seeking indemnification pursuant to this Section 6.2.5 (an
“Indemnified Party”) of written notice of any investigation, claim, proceeding
or other action in respect of which indemnification is being sought (each, a
“Claim”), the Indemnified Party promptly shall notify the Person against whom
indemnification pursuant to this Section 6.2.5 is being sought (the
“Indemnifying Party”) of the commencement thereof; but the omission to so notify
the Indemnifying Party shall not relieve it from any liability that it otherwise
may have to the Indemnified Party, except to the extent that the Indemnifying
Party is materially prejudiced and forfeits substantive rights and defenses by
reason of such failure.  In connection with any Claim as to which both the
Indemnifying Party and the Indemnified Party are parties, the Indemnifying Party
shall be entitled to assume the defense thereof.  Notwithstanding the assumption
of the defense of any Claim by the Indemnifying Party, the Indemnified Party
shall have the right to employ separate legal counsel and to participate in the
defense of such Claim, and the Indemnifying Party shall bear the reasonable
fees, out of pocket costs and expenses of such separate legal counsel to the
Indemnified Party if (and only if): (i) the Indemnifying Party shall have agreed
to pay such fees, costs and expenses, (ii) the Indemnified Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (iii) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim.  If
the Indemnified Party employs separate legal counsel in circumstances other than
as described in the preceding sentence, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party.  Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than one
firm of counsel for the Indemnified Party (together with appropriate local
counsel).  The Indemnified Party shall not, without the prior written consent of
the Indemnifying Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not include an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment or contain any admission of
wrongdoing.

 
 

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                           (d)           Contribution.  If the indemnification
provided for in this Section 6.2.5 is unavailable to or insufficient to hold
harmless an Indemnified Party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions or alleged statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.  The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by such Indemnifying Party or by such
Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.  The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.2.5(d) were determined by pro rata
allocation (even if the Purchasers or any underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 6.2.5
(d).  The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

                           (e)           Limitation on Purchasers’ and
Underwriters’ Obligations.  Notwithstanding any other provision of this Section
6.2.5, in no event shall (i) any Purchaser have any liability under this Section
6.2.5 for any amounts in excess of the dollar amount of the proceeds actually
received by such Purchaser from the sale of Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) pursuant to
any Registration Statement under which such Registrable Securities are
registered under the Securities Act and (ii) any underwriter be required to
undertake liability to any Person hereunder for any amounts in excess of the
aggregate discount, commission or other compensation payable to such underwriter
with respect to the Registrable Securities underwritten by it and distributed
pursuant to the Registration Statement.

                           (f)           Other Liabilities.  The obligations of
the Borrower under this Section 6.2.5 shall be in addition to any liability
which the Borrower may otherwise have to any Indemnified Person and the
obligations of any Indemnified Person under this Section 6.2.5 shall be in
addition to any liability which such Indemnified Person may otherwise have to
the Borrower.  The remedies provided in this Section 6.2.5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to an
indemnified party at law or in equity.

6.2.6           Rule 144.  With a view to making available to the Purchasers the
benefits of Rule 144, the Borrower agrees to use its best efforts to:

                           (a)           comply with the provisions of paragraph
(c)(1) of Rule 144; and

                           (b)           file with the SEC in a timely manner
all reports and other documents required to be filed by the Borrower pursuant to
Section 13 or 15(d) under the 1934 Act; and, if at any time it is not required
to file such reports but in the past had been required to or did file such
reports, it will, upon the request of any Purchasers, make available other
information as required by, and so long as necessary to permit sales of, its
Registrable Securities pursuant to Rule 144.

                                                 6.2.7           Common Stock
Issued Upon Stock Split, etc.  The provisions of this Section 6.2 shall apply to
any shares of Common Stock or any other securities issued as a dividend or
distribution in respect of the Conversion Shares or the Warrant Shares.

                                                 6.2.8           Termination of
Registration Rights.  The piggy-back registration rights granted in this Section
6.2 shall terminate with respect to a security upon the date such security is
first eligible to be resold pursuant to Rule 144 of the Securities Act.

 
 

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                           6.3           [Omitted.]

                           6.4.           [Omitted.]
 
                           6.5           [Omitted.]
 
                           6.6           Filing of Reports.  Borrower shall file
on a timely basis, any and all reports or amendments thereto, as it is required
to file in order to remain fully current with all of its reporting obligations
under the Exchange Act so as to enable sales without resale limitations two (2)
years from the date of final Closing, pursuant to Rule 144, as amended (“Rule
144 Sales”). The Borrower shall pay for all opinions or similar letters to its
transfer agent, as well as pay for all transfer agent costs, relating to the
removal of the Rule 144 restrictive legend on share certificates representing
the Conversion Shares or Warrant Shares.

For avoidance of doubt, all references herein to filings to be made on a “timely
basis” shall include and mean, any extension periods permissible under Rule
12b-25 of the Exchange Act, provided that the Borrower has complied with such
rule, but not beyond said extension date.
 
7.           CONDITIONS

                           7.1           Conditions Precedent to the Obligation
of the Borrower to Close and to Sell the Securities.  The obligation hereunder
of the Borrower to close and issue and sell the Securities to the Purchasers at
a Closing is subject to the satisfaction or waiver, at or before such Closing of
the conditions set forth below.  These conditions are for the Borrower’s sole
benefit and may be waived by the Borrower any time in their sole discretion.

                                                7.1.1           Accuracy of the
Purchasers’ Representations and Warranties.  The representations and warranties
of each Purchaser (including, for avoidance of doubt, those relating to the
Questionnaire) shall be true and correct in all material respects as of the date
when made and as of such Closing as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all material respects as of such date.

                                                7.1.2           Performance by
the Purchasers.  Each Purchaser shall have performed, satisfied, and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Purchasers at
or prior to such Closing.

                                                7.1.3           No
Injunction.  No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

                                                7.1.4           Delivery of
Purchase Price.  The Purchase Price for the full principal amount of Units shall
be available in cleared funds and authorized by the  Borrower, in their sole and
absolute discretion, for distribution on such Closing in accordance with the
terms hereof.

                                                 7.1.5           Delivery of
Transaction Documents.  The Transaction Documents shall have been duly executed
and delivered by the Purchasers to the Borrower.

                                 7.1.6           Acceptance of Securities
Purchase Agreement.  The Company shall have duly executed and delivered a copy
of the acceptance page to the Securities Purchase Agreement for each individual
Purchaser.

                           7.2           Conditions Precedent to the Obligation
of the Purchasers to Close and to Purchase the Shares.  The obligation hereunder
of the Purchasers to purchase the Units and consummate the transactions
contemplated by this Agreement is subject to the satisfaction or waiver, at or
before such Closing, of each of the conditions set forth below.  These
conditions are for the Purchasers’ sole benefit and may be waived in writing by
the Purchasers at any time in their sole discretion.

 
 

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                                                7.2.1           Accuracy of the
Borrower’s Representations and Warranties.  Each of the representations and
warranties of the Borrower in this Agreement and the other Transaction Documents
shall be true and correct in all material respects as of such Closing, except
for representations and warranties that speak as of a particular date, which
shall be true and correct in all material respects as of such date.

                                                7.2.2           Performance by
the Borrower.  The Borrower shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Borrower at or
prior to such Closing.

                                                7.2.3           No Suspension,
Etc.  Trading in the Common Stock of the Borrower shall not have been suspended
by the SEC or the OTC Bulletin Board (except for any suspension of trading of
limited duration agreed to by the Borrower, which suspension shall be terminated
prior to the Closing).

                                                7.2.4           No
Injunction.  No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

                                                7.2.5           No Proceedings
or Litigation.  No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no investigation by any
governmental authority shall have been initiated, against the Borrower, or any
of the officers, directors or affiliates of the Borrower seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.

                                                7.2.6           Notes and
Warrants.  At the Closing, the Borrower shall have delivered to the Purchasers
the Notes and Warrants along with all appropriate board resolutions or other
necessary documentation in order to issue the Securities in such denominations
as each Purchaser may request.  The Company shall have paid any commitment or
similar fees to Purchaser and its Management at or prior to the first
Closing. The Borrower shall also deliver this Agreement, duly executed by the
Borrower.

                                                7.2.7           Secretary’s
Certificate.  The Borrower shall deliver to the Purchaser, a secretary’s
certificate, dated as of the each Closing Date, as to (i) the resolutions
adopted by the Board of Directors approving the transactions contemplated
hereby, (ii) the Borrower’s Articles of Incorporation, (iii) the Bylaws, each as
in effect at such Closing, and (iv) the authority and incumbency of the officers
of the Borrower executing the Transaction Documents and any other documents
required to be executed or delivered in connection therewith.

                                                7.2.8           Officer’s
Certificate. On each Closing Date, the Borrower shall have delivered to the
Purchaser a certificate signed by an executive officer on behalf of the
Borrower, dated as of such first Closing Date, confirming the accuracy of the
Borrower’s representations, warranties, and covenants as of such Closing Date,
setting forth the amount of fees and total interest it believes are included as
part of the issuance of the Notes (inclusive of amounts paid to Wellfleet
Partners, Inc. or otherwise)  that, based on the foregoing the Company does not
have reason to believe that the Notes and Warrants are unenforceable for any
reason, and confirming the compliance by the Borrower with the conditions
precedent set forth in paragraph 7.2.9 as of such Closing.

7.2.9           Material Adverse Effect.  No Material Adverse Effect shall have
occurred at or before such Closing Date.

                                                7.2.10           Legal
Opinion.  Company shall assist with issuing and depositing stock certificates
including the preparation of any document including an opinion of counsel if
necessary. 

8.           LEGAL FEES.

           8.1           Legal Fees.   The Borrower shall, at the first closing
of the offering, reimburse all legal fees, and reasonable costs, and other
expenses of the  Purchasers counsel, Ronniel Levy, Esq., of which $5,000 shall
have been paid prior to closing with the remaining $12,500 and expenses at the
first Closing.

 
 

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9.           MISCELLANEOUS.

                           9.1           Indemnification.  Each Purchaser agrees
to defend, indemnify and hold the Borrower harmless against any liability, costs
or expenses arising as a result of any dissemination of any of the Securities by
such Purchaser in violation of the Securities Act or applicable state securities
law.

                           9.2           Governing Law.  The validity and
interpretation of this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.  Each of the
parties hereto and their assigns hereby consents to the exclusive jurisdiction
and venue of the Courts of the State of New York, in the City and County of New
York (or any federal courts having jurisdiction of such area) with respect to
any matter relating to this Agreement and performance of the parties’
obligations hereunder, the documents and instruments executed and delivered
concurrently herewith or pursuant hereto and performance of the parties’
obligations thereunder and each of the parties hereto hereby consents to the
personal jurisdiction of such courts and shall subject itself to such personal
jurisdiction.  Any action, suit or proceeding relating to such matters shall be
commenced, pursued, defended and resolved only in such courts and any
appropriate appellate court having jurisdiction to hear an appeal from any
judgment entered in such courts.  The parties irrevocably waive the defense of
an inconvenient forum to the maintenance of such suit or proceeding.  Service of
process in any action, suit or proceeding relating to such matters may be made
and served within or outside the State of New York by registered or certified
mail to the parties and their representatives at their respective addresses
specified in Section 9.7, provided that a reasonable time, not less than thirty
(30) days, is allowed for response.  Service of process may also be made in such
other manner as may be permissible under the applicable court rules.  THE
PARTIES HERETO WAIVE TRIAL BY JURY.

                           9.3           Successors and Assigns.  Except as
otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto.

                           9.4           Entire Agreement.  This Agreement and
the Exhibits hereto and thereto, and the other documents delivered pursuant
hereto and thereto, constitute the full and entire understanding and agreement
among the parties with regard to the subjects hereof and no party shall be
liable or bound to any other party in any manner by any representations,
warranties, covenants, or agreements except as specifically set forth herein or
therein.  Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided herein.

                           9.5           Severability.  In case any provision of
this Agreement shall be invalid, illegal, or unenforceable, it shall to the
extent practicable, be modified so as to make it valid, legal and enforceable
and to retain as nearly as practicable the intent of the parties, and the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

                           9.6           Amendment and Waiver.  Except as
otherwise provided herein, any term of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), with the written consent of the
Borrower and a majority of the Purchasers, or, to the extent such amendment
affects only one Purchaser, by the Borrower and such Purchaser.  Any amendment
or waiver effected in accordance with this Section shall be binding upon each
future holder of any security purchased under this Agreement (including
securities into which such securities have been converted) and the Borrower.

                           9.7           Notices.  All notices and other
communications required or permitted hereunder shall be in writing and shall be
effective when delivered personally, or sent by facsimile or email (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or when received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested) in each case to
the appropriate address set forth below:

 
 

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If to the Borrower:
With a copy to:
SpendSmart Networks, Inc.
805 Aerovista Pkwy, Suite 205
San Luis Obispo, CA 93401
Attn:  Alex Minicucci, Chief Executive Officer
Ruskin Moscou Faltischek, P.C.
1425 RXR Plaza
East Tower, 15th Floor
Uniondale, New York 11556
Attention:  Seth I. Rubin, Esq.
   
If to the Purchaser:
At the address set forth on the Purchaser’s Signature Page.
   
With a Copy to:
With a Copy to:
________________________
________________________
________________________
Attention: _________________
CKR Law LLP
1330 Avenue of the Americas, 35th Floor
New York, New York
Attention:  Ron Levy, Esq.
   

                           9.8           Faxes, Electronic Mail and
Counterparts.  This Agreement may be executed in one or more
counterparts.  Delivery of an executed counterpart of the Agreement or any
exhibit attached hereto by facsimile transmission or other electronic means (any
such delivery, an “Electronic Delivery”), shall be treated in all manner and
respects as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof
delivered in person.

                           9.9           Enforcement. In addition to other
remedies available in law or in equity, the Note shall be deemed and considered
an irrevocable instrument for the payment of money only, enforceable on its face
and by its terms in summary proceeding or, at the election of the holder
thereof, a regular or other proceeding.  Note holder shall be entitled to
reimbursement of any and all costs and fees relating to enforcement of this
Agreement or the Note or Warrant, including reimbursement of legal fees.  At the
request of any party hereto, each other party hereto shall re-execute original
forms hereof and deliver them in person to all other parties.  No party hereto
shall raise the use of Electronic Delivery to deliver a signature or the fact
that any signature or agreement or instrument was transmitted or communicated
through the use of Electronic Delivery as a defense to the formation of a
contract, and each such party forever waives any such defense, except to the
extent such defense related to lack of authenticity.

                           9.10           Titles and Subtitles.  The titles of
the paragraphs and subparagraphs of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.

                           9.11           Further Assurances.  At any time and
from time to time after the Closing, upon reasonable request of the other, each
party shall do, execute, acknowledge and deliver such further acts, assignments,
transfers, conveyances and assurances as may be reasonably required for the more
complete consummation of the transactions contemplated herein.

                           9.12           Legal Fees.  In the event any suit or
other legal proceeding is brought for the enforcement of any of the provisions
of this Agreement, the parties hereto agree that the prevailing party or parties
shall be entitled to recover from the other party or parties upon final judgment
on the merits reasonable attorneys’ fees, including attorneys’ fees for any
appeal, and costs incurred in bringing such suit or proceeding.

APPLICABLE ONLY IN THE EVENT ANY UNITS ARE SOLD TO FLORIDA RESIDENTS - FLORIDA
LAW PROVIDES THAT WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, ANY
SALE MADE IN FLORIDA IS VOIDABLE BY THE PURCHASER WITHIN THREE DAYS AFTER THE
FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE BORROWER, AN
AGENT OF THE BORROWER OR AN AUTHORIZED ESCROW AGENT OR WITHIN THREE DAYS AFTER
THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER
OCCURS LATER.  THIS SALE IS BEING MADE IN FLORIDA. PAYMENTS FOR TERMINATED
SUBSCRIPTIONS VOIDED BY PURCHASERS AS PROVIDED FOR IN THIS PARAGRAPH WILL BE
PROMPTLY REFUNDED WITHOUT INTEREST.  NOTICE SHOULD BE GIVEN TO THE BORROWER AT
THE ADDRESS SPECIFIED HEREIN.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
 

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PURCHASER SIGNATURE PAGE

           IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth on the Purchase Signature Page hereto.

Manner in Which Title is to be Held. (check one)

___ Individual Ownership
___ Community Property
___ Joint Tenant with Right of Survivorship (both parties must sign)
___ Partnership
___ Tenants in common
___ Corporation
___ Trust
___ IRA or Keough
___ Other (please indicate)

Amount Invested:
$_______________________                                                                                     Dated:  _______________________

INDIVIDUAL
PURCHASER                                                                                     ENTITY
PURCHASER

Name of entity, if any__________________
Signature (Individual)
By:                                                                
     *Signature
Its                                                                
Signature
(Joint)                                                                                  Title
(all record holders must sign)

 
Name(s) Typed or
Printed                                                                           Name
Typed or Printed

Address to Which
Correspondence                                                                                     Address
to Which Correspondence
Should be
Directed                                                                           Should
be Directed

 

 
City, State and Zip
Code                                                                           City,
State and Zip Code

 
Tax Identification
or                                                                                     Tax
Identification or
Social Services
Number                                                                                     Social
Services Number

*
If the Note being subscribed for by any entity, the Certificate of Signatory on
the next page must also be completed

 

The foregoing Securities Purchase Agreement is accepted and the Company hereby
agrees to be bound by its terms.

SPENDSMART NETWORKS, INC.

Dated:  _________  __,
2015                                                                                     By:
            Name:  Alex Minicucci
            Title:    CEO

 
 

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CERTIFICATE OF SIGNATORY

(To be completed if Notes are being purchased by an entity)

           I, ____________________________________, the
______________________________
(name of
signatory)                                                                                     (title)

of __________________________ (the "Entity"),
a_________________________________________
(type of entity)

hereby certify that I am empowered and duly authorized by the Entity to execute
the Securities Purchase Agreement and to purchase the Units, and certify further
that the Securities Purchase Agreement has been duly and validly executed on
behalf of the Entity and constitutes a legal and binding obligation of the
Entity.

           IN WITNESS WHEREOF, I have set my hand
this                                                                                     
____day of ____________, 2015.

 
(Signature)

___________________________________
                   (Print Name)

 
 

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EXHIBIT A

FORM OF 9% CONVERTIBLE PROMISSORY NOTE

See attached.

 
 

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EXHIBIT B

FORM OF WARRANT

See attached.

 
 

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EXHIBIT C

CONFIDENTIAL INVESTOR QUESTIONNAIRE

The Purchaser represents and warrants that he, she or it comes within one
category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category.  ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL except as otherwise required by
law.  The undersigned agrees to furnish any additional information which the
Company deems necessary in order to verify the an­swers set forth below.

Category A  
The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, pres­ently
exceeds $1,000,000.

Explanation.  For purposes of calculating net worth under this Category A, (i)
the undersigned’s primary residence shall not be included as an asset, (ii)
indebtedness that is secured by the undersigned’s primary residence, up to the
estimated fair market value of the primary residence at the time of the sale of
securities, shall not be included as a liability, (iii) to the extent that the
indebtedness that is secured by the primary residence is in excess of the fair
market value of the primary residence, the excess amount shall be included as a
liability, and (iv) if the amount of outstanding indebtedness that is secured by
the primary residence exceeds the amount outstanding 60 days prior to the
execution of this Subscription Agreement, other than as a result of the
acquisition of the primary residence, the amount of such excess shall be
included as a liability.

Category B  
The undersigned is an individual (not a partnership, corporation, etc.) who had
an income in excess of $200,000 in each of the two most recent years, or joint
income with his or her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year.

Category C  
The undersigned is a director or executive officer of the Company which is
issuing and selling the Securities.

Category D  
The undersigned is a bank; a savings and loan association; insurance company;
registered investment company; registered business development company; licensed
small business investment company (“SBIC”); or employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan association, insurance
company or registered investment advisor, or (b) the plan has total assets in
excess of $5,000,000 or (c) is a self directed plan with investment decisions
made solely by persons that are accredited investors. (describe entity)

 
Category E  
The undersigned is a private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940. (describe entity)

 
Category F  
The undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the
Internal Revenue Code, in each case not formed for the specific purpose of
acquiring the Securities and with total assets in excess of $5,000,000.(describe
entity)

 
Category G  
The undersigned is a trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities, where the purchase is
directed by a “sophisticated investor“ as defined in Regulation 506(b)(2­)(ii)
under the Act.

Category H  
An entity in which all of the equity owners qualify under any of the above
subparagraphs. If the undersigned belongs to this investor category only, list
the equity owners of the undersigned, and the investor category which each such
equity owner satisfies. (describe entity)

 
Category I  
The undersigned is not within any of the categories above and is therefore not
an accredited investor.

The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Closing Date in the event that the representations and
warranties in this Agreement shall cease to be true, accurate and complete.

SUITABILITY (please answer each question)
(a)  For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:

(b)  For an individual Subscriber, please describe any college or graduate
degrees held by you:

(c)  For all Subscribers, please state whether you have participated in other
private placements before:
YES_______                                           NO_______

(d) If your answer to question (c) above was “YES”, please indicate frequency of
such prior participation in private placements of:
 
 
   Public                                    Private                                 Public
or Private
  Companies                                
Companies                                 Financing Companies

Frequently                                             
                                            
Occasionally                                             
                                            
Never                                             
                                            

(e) For individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:
YES_______                                           NO_______

(f)  For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future:
YES_______                                           NO_______

(g)  For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:
YES_______                                           NO_______

(h)  For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?
YES_______                                           NO_______

(i)  For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
YES_______                                           NO_______

MANNER IN WHICH TITLE IS TO BE HELD (circle one)
(a)           Individual Ownership
(b)           Community Property
(c)           Joint Tenant with Right of
Survivorship (both parties must sign)
(d)           Partnership*
(e)           Tenants in Common
(f)           Company*
(g)           Trust*
(h)           Other

*If Securities are being subscribed for by an entity, the attached Certificate
of Signatory must also be completed.

FINRA AFFILIATION.

Are you affiliated or associated with a FINRA member firm (please check one):

Yes _________                                           No __________

If Yes, please describe:
_________________________________________________________
_________________________________________________________
_________________________________________________________

*If Subscriber is a Registered Representative with a FINRA member firm, have the
following acknowledgment signed by the appropriate party:

The undersigned FINRA member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

_________________________________
Name of FINRA Member Firm

By: ______________________________
Authorized Officer

Date: ____________________________

The undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained in this Confidential Investor Questionnaire and such answers have been
provided under the assumption that the Company will rely on them.