COMMITTED EQUITY FACILITY AGREEMENT

 

This Committed Equity Facility Agreement (the “Agreement”) is dated as of the
27th day of February, 2012 the (“Effective Date”) by and between TCA GLOBAL
CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Investor”)
and CONO ITALIANO, INC., a Nevada corporation (the “Company”).

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, from time to
time as provided herein, and the Investor shall purchase from the Company, up to
$1,500,000 of the Company’s common stock, $0.001 par value per share (the
“Common Stock”); and

 

WHEREAS, such investments will be made in reliance upon the provisions of
Regulation D (“Regulation D”) of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (collectively, the “Securities
Act”), or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the
transactions to be entered into hereunder;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants of the
parties hereinafter expressed and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
each intending to be legally bound, agree as follows:

 

ARTICLE I

CERTAIN DEFINITIONS

 

For purposes of this Agreement, except as otherwise expressly provided or
otherwise defined elsewhere in this Agreement, or unless the context otherwise
requires, the capitalized terms in this Agreement shall have the meanings
assigned to them in this Article as follows:

 

1.1           “Advance” shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.

 

1.2           “Advance Fee” shall mean an amount in United States funds equal to
six percent (6%) of the gross amount of each Advance.

 

1.3           “Advance Notice” shall mean a written notice in the form of
Exhibit “A” attached hereto, executed by an officer of the Company and delivered
to the Investor and setting forth the Advance amount that the Company requests
from the Investor.

 

1.4           “Advance Notice Date” shall mean each date the Company delivers
(in accordance with Section 2.1(b) of this Agreement) to the Investor an Advance
Notice requiring the Investor to advance funds to the Company, subject to the
terms of this Agreement.  No Advance Notice Date will be less than five (5)
Trading Days after the immediately prior Advance Notice Date given by the
Company, if any.

 

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1.5           “Advance Settlement Date” shall mean the third (3rd) Trading Day
after the relevant Pricing Period, or such earlier day as may be available for
settlement.

 

1.6           “Affiliate” shall have the meaning set forth in Rule 405 of the
Securities Act.

 

1.7           “Agreement” shall have the meaning set forth in the preamble
paragraph hereto.

 

1.8           “By-Laws” shall have the meaning set forth in Section 4.4.

 

1.9           “Certificate of Incorporation” shall have the meaning set forth in
Section 4.4.

 

1.10         “Claims” shall have the meaning set forth in Section 5.1.

 

1.11         “Closing” shall mean one of the closings of a purchase and sale of
Common Stock pursuant to Section 2.2.

 

1.12         “Commitment Amount” shall mean the aggregate amount of up to
$1,500,000 which the Investor has agreed to provide to the Company in order to
purchase the Shares pursuant to the terms and conditions of this Agreement.

 

1.13         “Commitment Period” shall mean the period commencing on the
Effective Date, and expiring upon the termination of this Agreement in
accordance with Section 10.2.

 

1.14         “Common Stock” shall have the meaning set forth in the recitals of
this Agreement.

 

1.15         “Company” shall have the meaning set forth in the preamble
paragraph hereto.

 

1.16         “Company Indemnitees” shall have the meaning set forth in
Section 5.2.

 

1.17         “Condition Satisfaction Date” shall have the meaning set forth in
Article VII.

 

1.18         “Consolidation Event” shall have the meaning set forth in
Section 6.9.

 

1.19         “Effective Date” shall mean the date of this Agreement set forth in
the introductory paragraph of this Agreement.

 

1.20         “Environmental Laws” shall have the meaning set forth in
Section 4.9.

 

1.21         “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

1.22         “Facility Fee Shares” shall have the meaning set forth in Section
12.4(d).

 

1.23         “Indemnified Liabilities” shall have the meaning set forth in
Section 5.1.

 

1.24         “Indemnitee” shall have the meaning set forth in Section 5.3.

 

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1.25         “Indemnitor” shall have the meaning set forth in Section 5.3.

 

1.26         “Investor” shall have the meaning set forth in the preamble
paragraph hereto.

 

1.27         “Investor Indemnitees” shall have the meaning set forth in
Section 5.1.

 

1.28         “Market Price” shall mean the lowest daily VWAP of the Common Stock
during the relevant Pricing Period.

 

1.29         “Material Adverse Effect” shall mean any condition, circumstance,
or situation that has resulted in, or would reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or enforceability of
this Agreement or the transactions contemplated herein; (ii) a material adverse
effect on the results of operations, assets, business or condition (financial or
otherwise) of the Company, taken as a whole; or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis
its obligations under this Agreement.

 

1.30         “Maximum Advance Amount” shall mean, for each Advance Notice, the
greater of: (i) an amount calculated by multiplying the Market Price applicable
to the relevant Advance Notice, multiplied by 400,000 Shares; or (ii) two
hundred percent (200%) of the average daily volume of shares of Common Stock
traded during the immediately preceding five (5) consecutive trading days
applicable to the relevant Advance Notice.

 

1.31         “Nine Month Valuation Date” shall have the meaning set forth in
Section 12.4(d).

 

1.32         “Ownership Limitation” shall have the meaning set forth in
Section 2.1(a).

 

1.33         “Person” shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.

 

1.34         “Preferred Stock” shall have the meaning set forth in Section 4.4.

 

1.35         “Pricing Period” shall mean the five (5) consecutive Trading Days
after the Advance Notice Date.

 

1.36         “Principal Market” shall mean the Nasdaq Global Select Market, the
Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board, the OTC
Markets, the NYSE Euronext or the New York Stock Exchange, whichever is at the
time the principal trading exchange or market for the Common Stock.

 

1.37         “Purchase Price” shall be set at ninety-five percent (95%) of the
Market Price during the Pricing Period.

 

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1.38         “Registrable Securities” shall mean: (i) the Shares; and (ii) any
securities issued or issuable with respect to the Shares by way of exchange,
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. 
As to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when: (a) the Registration Statement has been
declared effective by the SEC and such Registrable Securities have been disposed
of pursuant to the Registration Statement; (b) such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule 144”) are met; or (c) in the opinion of counsel to the Company such
Registrable Securities may permanently be sold without registration or without
any time, volume or manner of sale limitations pursuant to Rule 144.

 

1.39         “Registration Rights Agreement” shall mean the Registration Rights
Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.

 

1.40         “Registration Statement” shall mean a registration statement on
Form S-1 or Form S-3 or on such other form promulgated by the SEC for which the
Company then qualifies and which counsel for the Company shall deem appropriate,
and which form shall be available for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.

 

1.41         “Regulation D” shall have the meaning set forth in the recitals of
this Agreement.

 

1.42         “SEC” shall mean the United States Securities and Exchange
Commission.

 

1.43         “SEC Documents” shall have the meaning set forth in Section 4.3.

 

1.44         “Securities Act” shall have the meaning set forth in the recitals
of this Agreement.

 

1.45         “Settlement Document” shall have the meaning set forth in
Section 2.2(a).

 

1.46         “Share Value” shall have the meaning set forth in Section 12.4(d).

 

1.47         “Shares” shall mean the shares of Common Stock to be issued from
time to time hereunder pursuant to Advances.

 

1.48         “Trading Day” shall mean any day during which the Principal Market
shall be open for business.

 

1.49         “Valuation Date” shall have the meaning set forth in Section
12.4(d).

 

1.50         “VWAP” means, for any Trading Day, the daily volume weighted
average price of the Common Stock for such date on the Principal Market as
reported by Bloomberg L.P. (based on a Trading Day from 9:00 a.m. (New York City
time) to 4:02 p.m. (New York City time)).

 

ARTICLE II

ADVANCES

 

2.1           Advances; Mechanics. Subject to the terms and conditions of this
Agreement (including, without limitation, the conditions of Article VII hereof),
the Company, at its sole and exclusive option, may issue and sell to the
Investor, and the Investor shall purchase from the Company, shares of Common
Stock on the following terms:

 

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(a)          Advance Notice.  At any time during the Commitment Period, the
Company may require the Investor to purchase shares of Common Stock by
delivering an Advance Notice to the Investor, subject to the conditions set
forth in Article VII; provided, however, that: (i) the amount for each Advance
as designated by the Company in the applicable Advance Notice shall not be more
than the Maximum Advance Amount; (ii) the aggregate amount of the Advances
pursuant to this Agreement shall not exceed the Commitment Amount; (iii) in no
event shall the number of Shares issuable to the Investor pursuant to an Advance
cause the aggregate number of Shares beneficially owned (as calculated pursuant
to Section 13(d) of the Exchange Act) by the Investor and its Affiliates to
exceed 9.99% of the then outstanding Common Stock (the “Ownership Limitation”);
and (iv) in no event shall the aggregate offering price or number of Shares, as
the case may be, exceed the aggregate offering price or number of Shares, as the
case may be, available for issuance under the Registration Statement (the
“Registration Limitation”). Notwithstanding any other provision in this
Agreement, the Company acknowledges and agrees that upon receipt of an Advance
Notice, the Investor may sell Shares that it is unconditionally obligated to
purchase under such Advance Notice prior to taking possession of such Shares.

 

(b)          Date of Delivery of Advance Notice.  Advance Notices shall be
delivered in accordance with the instructions set forth on the bottom of
Exhibit “A”.  An Advance Notice shall be deemed delivered on: (i) the Trading
Day it is received by the Investor, if such Advance Notice is received prior to
5:00 pm, Eastern Time; or (ii) the immediately succeeding Trading Day if such
Advance Notice is received by Investor after 5:00 pm, Eastern Time, on a Trading
Day or at any time on a day which is not a Trading Day.  No Advance Notice may
be deemed delivered on a day that is not a Trading Day. The Company may not
deliver an Advance Notice to Investor unless at least five (5) Trading Days have
elapsed since the immediately preceding Advance Notice Date.

 

(c)          Ownership Limitation.  In connection with each Advance Notice
delivered by the Company, any portion of an Advance that would cause the
Investor to exceed the Ownership Limitation shall automatically be deemed to be
withdrawn by the Company with no further action required by the Company.

 

(d)          Registration Limitation.  In connection with each Advance Notice,
any portion of an Advance that would cause the Investor to exceed the
Registration Limitation shall automatically be deemed to be withdrawn by the
Company with no further action required by the Company. 

 

2.2           Closings.  Each Closing shall take place on the Advance Settlement
Date in accordance with the procedures set forth below.  In connection with each
Closing, the Company and the Investor shall fulfill each of its obligations as
set forth below:

 

(a)          Within one (1) Trading Day after the expiration of the Pricing
Period applicable with respect to an Advance Notice, the Investor shall deliver
to the Company a written document (each a “Settlement Document”) setting forth:
(i) the amount of the Advance (taking into account any adjustments pursuant to
Section 2.1 above); (ii) the Purchase Price; (iii) the Market Price (as
supported by a report by Bloomberg L.P. indicating the VWAP for each of the
Trading Days during the Pricing Period); and (iv) the number of Shares to be
issued and subscribed for in connection with the applicable Advance (which in no
event will be greater than the Ownership Limitation or the Registration
Limitation), in each case taking into account the terms and conditions of this
Agreement.  The Settlement Document shall be in the form attached hereto as
Exhibit “B”.

 

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(b)          Upon receipt of the Settlement Document with respect to each
Advance, the Company shall, by promptly (and in any event not later than one (1)
Trading Day after receipt) signing the Settlement Document and returning it to
the Investor, confirm that it has obtained all permits and qualifications, if
any, required for the issuance and transfer of the Shares applicable to such
Advance, or shall have the availability of exemptions therefrom, and that the
sale and issuance of such Shares shall be legally permitted by all laws and
regulations to which the Company is subject. Execution of the Settlement
Document by the Company shall also be deemed a representation by the Company
that all conditions to an Advance under Article VII have been fully satisfied in
all material respects as of each Condition Satisfaction Date.

 

(c)          On each Advance Settlement Date, the Company will, or will cause
its transfer agent to, electronically transfer such number of Shares registered
in the name of the Investor as shall equal: (i) the amount of the Advance
specified in such Advance Notice and confirmed in the Settlement Document signed
by the Company (as may be reduced according to the terms of this Agreement);
divided by (ii) the Purchase Price, by crediting the Investor’s account or its
designee’s account at the Depository Trust Company through its Deposit
Withdrawal Agent Commission System or by such other means of delivery as may be
mutually agreed upon by the parties hereto (which in all cases shall be freely
tradable, registered shares in good deliverable form, covered by an effective
Registration Statement pursuant to which the Investor is permitted to resell
such Shares) against payment of the Purchase Price in same day funds to an
account designated by the Company.  In the event the Shares cannot be delivered
through the Deposit Withdrawal Agent Commission System, then the Company shall
cause its transfer agent, on each Advance Settlement Date, to issue and
surrender to a common carrier for overnight delivery to the Investor,
certificates, registered in the name of the Investor or its designees,
representing the Shares applicable to such Advance. No fractional shares shall
be issued, and any fractional amounts shall be rounded to the next higher whole
number of Shares. Any certificates evidencing Shares delivered pursuant hereto
shall be free of restrictive legends.

 

(d)          On or prior to the Advance Settlement Date, each of the Company and
the Investor shall deliver to the other, as applicable, all documents,
instruments and writings required to be delivered by either of them pursuant to
this Agreement in order to implement and effect the transactions contemplated
herein.

 

2.3           Hardship.  In the event the Investor sells shares of the Company’s
Common Stock after receipt of an Advance Notice and the Company fails to perform
its obligations as mandated in Section 2.2, the Company agrees that in addition
to and in no way limiting the rights and obligations set forth in Article V
hereto, and in addition to any other remedy to which the Investor is entitled at
law or in equity, including, without limitation, specific performance, the
Investor shall be entitled to an injunction or injunctions to prevent such
breaches of this Agreement and to specifically enforce, without the posting of a
bond or other security, the terms and provisions of this Agreement.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF INVESTOR

 

Investor hereby represents and warrants to, and agrees with, the Company that
the following are true and correct as of the date hereof:

 

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3.1           Organization and Authorization.  The Investor is duly organized,
validly existing and in good standing under the laws of the Cayman Islands and
has all requisite power and authority to purchase and hold the Shares.  The
decision to invest and the execution and delivery of this Agreement by such
Investor, the performance by such Investor of its obligations hereunder and the
consummation by such Investor of the transactions contemplated hereby have been
duly authorized and requires no other proceedings on the part of the Investor. 
The undersigned has the right, power and authority to execute and deliver this
Agreement and all other instruments on behalf of the Investor.  This Agreement
has been duly executed and delivered by the Investor and, assuming the execution
and delivery hereof and acceptance thereof by the Company, will constitute the
legal, valid and binding obligations of the Investor, enforceable against the
Investor in accordance with its terms.

 

3.2           Evaluation of Risks.  The Investor has such knowledge and
experience in financial, tax and business matters as to be capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting its interests in connection with
this transaction.  It recognizes that its investment in the Company involves a
high degree of risk.

 

3.3           Investment Purpose. The securities are being purchased by the
Investor for its own account, and for investment purposes.  The Investor agrees
not to assign or in any way transfer the Investor’s rights to the securities or
any interest therein and acknowledges that the Company will not recognize any
purported assignment or transfer except in accordance with applicable Federal
and state securities laws.  No other person has or will have a direct or
indirect beneficial interest in the securities.  The Investor agrees not to
sell, hypothecate or otherwise transfer the Investor’s securities unless the
securities are registered under Federal and applicable state securities laws or
unless, in the opinion of counsel satisfactory to the Company, an exemption from
such laws is available.

 

3.4           Investor Status.  The Investor is an “Accredited Investor” as that
term is defined in Rule 501(a)(3) of Regulation D of the Securities Act.

 

3.5           No Legal Advice From the Company.  The Investor acknowledges that
it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel and investment and tax
advisors.  The Investor is relying solely on such counsel and advisors and not
on any statements or representations of the Company or any of the Company’s
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

 

3.6           Not an Affiliate.  The Investor is not an officer, director or a
Person that directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with the Company or any
Affiliate of the Company.

 

3.7           Trading Activities.  The Investor’s trading activities with
respect to the Company’s Common Stock shall be in compliance with all applicable
federal and state securities laws, rules and regulations and the rules and
regulations of the Principal Market on which the Common Stock is listed or
traded.  Neither the Investor nor its Affiliates has an open short position in
the Common Stock, and the Investor agrees that it shall not, and that it will
cause its Affiliates not to engage in any short sales of the Common Stock during
the Commitment Period; provided that the Company acknowledges and agrees that
upon receipt of an Advance Notice the Investor has the right to sell the Shares
to be issued to the Investor pursuant to the Advance Notice prior to receiving
such Shares, subject to the limitations set forth in this Section.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as stated below, on the disclosure schedules attached hereto, if any, or
in the SEC Documents, the Company hereby represents and warrants to the Investor
that the following are true and correct as of the Effective Date:

 

4.1           SEC Documents; Financial Statements. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and the Company has
timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under the Exchange Act (all of the
foregoing filed within the two (2) years preceding the date hereof or amended
after the date hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein, being
hereinafter referred to as the “SEC Documents”). The Company is current with its
filing obligations under the Exchange Act and all SEC Documents have been filed
on a timely basis or the Company has received a valid extension of such time of
filing and has filed any such SEC Document prior to the expiration of any such
extension. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
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. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except: (i) as may be
otherwise indicated in such financial statements or the notes thereto; or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading.

 

4.2           Organization and Qualification.  The Company is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power to own its properties and to
carry on its business as now being conducted.  Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect.

 

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4.3           Authorization, Enforcement, Compliance with Other Instruments. 
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement and any related agreements, in accordance with the
terms hereof and thereof; (ii) the execution and delivery of this Agreement and
any related agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by the
Company’s Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders; (iii) this Agreement
and any related agreements have been duly executed and delivered by the Company;
(iv) this Agreement and assuming the execution and delivery thereof and
acceptance by the Investor, any related agreements, constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors’ rights and remedies.

 

4.4           Capitalization.  The authorized capital stock of the Company
consists of 150,000,000 shares of Common Stock, of which 99,834,988 shares of
Common Stock are issued and outstanding as of the date hereof. There is no
preferred stock authorized, issued or outstanding as of the date hereof.  All of
such outstanding shares have been validly issued and are fully paid and
nonassessable. The Common Stock is currently quoted on the OTC Bulletin Board
under the trading symbol “CNOZ.”  Except as disclosed in the SEC Documents, no
shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. 
Except as disclosed in the SEC Documents, as of the date hereof: (i) there are
no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries, or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries; (ii) there
are no outstanding debt securities; (iii) there are no outstanding registration
statements; and (iv) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except pursuant to this Agreement). 
There are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by this Agreement or any related agreement or
the consummation of the transactions described herein or therein.  The Company
has furnished or made available to the Investor true and correct copies of the
Company’s Certificate of Incorporation, as amended and as in effect on the date
hereof (the “Certificate of Incorporation”), and the Company’s By-laws, as in
effect on the date hereof (the “By-laws”), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

 

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4.5           No Conflict.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not: (i) result in a violation of the Certificate of
Incorporation, any certificate of designations of any outstanding series of
Preferred Stock of the Company or By-laws; or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is quoted) applicable to the Company
or any of its subsidiaries or by which any material property or asset of the
Company is bound or affected and which would cause a Material Adverse Effect. 
Except as disclosed in the SEC Documents, neither the Company nor its
subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries that would cause a
Material Adverse Effect.  The business of the Company and its subsidiaries is
not being conducted in violation of any material law, ordinance or regulation of
any governmental entity.  Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof or thereof. 
All consents, authorization, orders, filings and registrations which the Company
is required to make or obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof.  The Company and its
subsidiaries are not aware of any fact or circumstance which might give rise to
any of the foregoing.

 

4.6           No Default.  Except as disclosed in the SEC Documents, the Company
is not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound, and neither the execution, nor the
delivery by the Company, nor the performance by the Company of its obligations
under this Agreement or any of the exhibits or attachments hereto, will conflict
with or result in the breach or violation of any of the terms or provisions of,
or constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company, under its Certificate of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound, or any statute, or any decree, judgment,
order, rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect.

 

4.7           Intellectual Property Rights.  The Company and its subsidiaries
own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted.  The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against the Company or its subsidiaries, regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company is not aware of any facts or circumstances which
might give rise to any of the foregoing.

 

4.8           Employee Relations.  Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened.  None of the
Company’s or its subsidiaries’ employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

 

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4.9           Environmental Laws.  The Company and its subsidiaries are: (i) in
compliance with any and all applicable material foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“Environmental Laws”); (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses; and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, in each case except
where such noncompliance or nonreceipt would not, individually or in the
aggregate, have a Material Adverse Effect.

 

4.10         Title.  Except as set forth in the SEC Documents, the Company has
good and marketable title to its properties and material assets owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than such as are not material to the business of the
Company.  Any real property and facilities held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.

 

4.11         Insurance.  The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary for similarly situated companies in the businesses in which the
Company and its subsidiaries are engaged.  The Company has not been refused any
insurance coverage sought or applied for and the Company does not have any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.

 

4.12         Regulatory Permits.  The Company and its subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

 

4.13         Internal Accounting Controls.  The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (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.

 

4.14         No Material Adverse Breaches, etc.  Except as set forth in the SEC
Documents, neither the Company nor any of its subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which, in the judgment of the Company’s officers, has or is
expected in the future to have a Material Adverse Effect on the Company or its
subsidiaries, taken as a whole.

 

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4.15         Absence of Litigation.  Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending against or affecting the Company, the Common Stock or any of the
Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would
have a Material Adverse Effect.

 

4.16         Subsidiaries.  Except as disclosed in the SEC Documents, the
Company does not presently own or control, directly or indirectly, any interest
in any other Person.

 

4.17         Tax Status.  Except as disclosed in the SEC Documents, the Company
and each of its subsidiaries has made or filed all foreign, federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith, and the Company and its subsidiaries
have set aside on their respective books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply.  There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.

 

4.18         Certain Transactions.  Except as set forth in the SEC Documents,
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

 

4.19         The Shares. The Shares have been duly authorized and, when issued,
delivered and paid for pursuant to this Agreement, will be validly issued and
fully paid and non-assessable, free and clear of all liens, claims and
encumbrances of any nature or kind, and will be issued in compliance with all
applicable United States federal and state securities laws. The capital stock of
the Company, including the Common Stock, shall conform in all material respects
to the description thereof to be contained in the Registration Statement.
Neither the stockholders of the Company, nor any other Person, have any
preemptive rights or rights of first refusal with respect to the Shares or,
except as set forth in the SEC Documents, other rights to purchase or receive
any of the Shares or any other securities or assets of the Company, and no
Person has the right, contractual or otherwise, to cause the Company to issue to
it, or register pursuant to the Securities Act, any shares of capital stock or
other securities or assets of the Company upon the issuance or sale of the
Shares. The Company is not obligated to offer the Shares on a right of first
refusal basis or otherwise to any third parties including, without limitation,
to current or former shareholders of the Company, underwriters, brokers, or
agents.

 

4.20         Dilution.  The Company is aware and acknowledges that issuance of
the Shares could cause dilution to existing shareholders and could significantly
increase the outstanding number of shares of Common Stock.

 

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4.21         Acknowledgment Regarding Investor’s Purchase of Shares. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of an
arm’s length investor with respect to this Agreement and the transactions
contemplated hereunder. The Company further acknowledges that the Investor is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereunder and any advice given by the Investor or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Investor’s purchase of the Shares
hereunder.  The Company is aware and acknowledges that it may not be able to
request Advances under this Agreement until a Registration Statement becomes
effective, and only in compliance with the rules of the Principal Market.  The
Company further is aware and acknowledges that any fees paid or shares issued
pursuant to Section 12.4 hereunder shall be earned as of the Effective Date and
are not refundable or returnable under any circumstances.

 

ARTICLE V

INDEMNIFICATION

 

The Investor and the Company covenant to the other the following with respect to
itself:

 

5.1           Indemnification by the Company. In consideration of the Investor’s
execution and delivery of this Agreement, and in addition to all of the
Company’s other obligations under this Agreement, the Company shall, and does
hereby agree to, defend, protect, indemnify and hold harmless the Investor, and
all of the Investor’s affiliates and subsidiaries, and each Person who controls
the Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the officers, directors, partners, members,
employees and agents of each of them (collectively, the “Investor Indemnitees”),
from and against any and all actions, causes of action, suits, claims, demands,
threats and proceedings (collectively, the “Claims”), and the Company agrees to
reimburse the Investor Indemnitees, or any of them, for any and all losses,
costs, penalties, fees, liabilities, obligations, judgments, expenses, and
damages, including, without limitation, reasonable attorneys’ fees, paralegals’
fees and other costs, expenses and disbursements reasonably incurred by the
Investor Indemnities, or any of them, in connection with investigating,
defending or settling any such Claims, including such expenses incurred
throughout all trial and appellate levels and administrative and bankruptcy
proceedings (collectively, the “Indemnified Liabilities”), suffered or incurred
by the Investor Indemnitees, or any of them, as a result of, or arising out of,
or relating to: (a) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Shares as originally filed or in any amendment thereof, or in any related
prospectus, or in supplement, or in any amendment thereof or supplement thereto,
or arising out of or which 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 not misleading; provided, however, that the Company will
not be liable in any such case to the extent that any such Indemnified
Liabilities arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of the Investor specifically for inclusion therein; (b) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or any other certificate, instrument or document
contemplated hereby or thereby; (c) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; and (d) any Claim brought
or made against the Investor Indemnitees, or any of them, not arising out of any
action or inaction of an Investor Indemnitee, and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement or
any other instrument, document or agreement executed pursuant hereto or thereto
by any of the Investor Indemnitees.  To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.

 

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5.2           Indemnification by Investor. In consideration of the Company’s
execution and delivery of this Agreement, and in addition to all of the
Investor’s other obligations under this Agreement, the Investor shall, and does
hereby agree to, defend, protect, indemnify and hold harmless the Company, and
all of the Company’s subsidiaries, and each Person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the officers, directors, partners, members, employees and
agents of each of them (collectively, the “Company Indemnitees”), from and
against any and all Claims, and the Investor agrees to reimburse the Company
Indemnitees, or any of them, for any and all Indemnified Liabilities, suffered
or incurred by the Company Indemnitees, or any of them, as a result of, or
arising out of, or relating to: (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement for the
registration of the Shares as originally filed or in any amendment thereof, or
in any related prospectus, or in any amendment thereof or supplement thereto, or
arising out of or which 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 not misleading, but only to the extent that any such untrue
statement or alleged untrue statement or omission or alleged omission was in
connection with information furnished to the Company by Investor specifically
for inclusion therein; provided, however, that the Investor will not be liable
in any such case to the extent that any such Indemnified Liabilities arise out
of or are based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein by the Company; (b) any
misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement or any other certificate, instrument or document
contemplated hereby or thereby; (c) any breach of any covenant, agreement or
obligation of the Investor contained in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; and (d) any Claim brought
or made against the Company Indemnitees, or any of them, not arising out of any
action or inaction of a Company Indemnitee, and arising out of or resulting from
the execution, delivery, performance or enforcement of this Agreement or any
other instrument, document or agreement executed pursuant hereto or thereto by
any of the Company Indemnitees.  To the extent that the foregoing undertaking by
the Investor may be unenforceable for any reason, the Investor shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

 

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5.3           Notice of Claim. For purposes of this Article V, a party that is
subject to a Claim and entitled to indemnification hereunder is sometimes
hereinafter referred to as the “Indemnitee,” and the party having the obligation
to indemnify the other is sometimes hereinafter referred to as the “Indemnitor.”
Promptly after receipt by an Indemnitee of notice of the commencement of any
Claim involving an Indemnified Liability, such Indemnitee shall, if an
Indemnified Liability in respect thereof is to be made against any Indemnitor,
deliver to the Indemnitor a written notice of the commencement thereof;
provided, however, that the failure to so notify the Indemnitor: (i) will not
relieve the Indemnitor of liability under this Article V, unless and to the
extent the Indemnitor did not otherwise learn of such Claim and such failure
results in the forfeiture by the Indemnitor of substantial rights and defenses;
and (ii) will not, in any event, relieve the Indemnitor from any obligations to
the Indemnitee, other than those indemnity obligations provided in this
Article V.  In the case of parties indemnified pursuant to Section 5.1 above,
counsel to the Indemnitee shall be selected by the Company, and, in the case of
parties indemnified pursuant to Section 5.2 above, counsel to the Indemnitee
shall be selected by the Investor. An Indemnitor may participate, at its own
expense, in the defense of any such Claim; provided, however, that counsel to
the Indemnitor shall not (except with the consent of the Indemnitee) also be
counsel to the Indemnitee. In no event shall the Indemnitor be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all Indemnitees in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. The Indemnitee
shall cooperate fully with the Indemnitor in connection with any negotiation or
defense of any Claim, and the Indemnitee shall furnish to the Indemnitor all
information reasonably available to the Indemnitee which relates to such Claim.
The Indemnitor shall keep the Indemnitee fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. An
Indemnitor will not, without the prior written consent of the Indemnitee, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened Claim in respect of which indemnification or contribution
may be sought under this Agreement (whether or not the Indemnitees are actual or
potential parties to such Claim) unless: (i) such settlement, compromise or
consent includes an unconditional release of each Indemnitee from all liability
arising out of such Claim; and (ii) such settlement, compromise or consent does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any Indemnitee.  Following indemnification as provided
for hereunder, the Indemnitor shall be subrogated to all rights of the
Indemnitee with respect to all third parties, firms or corporations relating to
the matter for which indemnification has been made.

 

5.4           Contribution. In the event that the indemnity provided in
Section 5.1 or Section 5.2 is unavailable to or insufficient to hold harmless an
Indemnitee for any reason, the Company and the Investor, as applicable,
severally agree to contribute to the aggregate Indemnified Liabilities to which
the Company and the Investor may be subject, as applicable, in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and by the Investor on the other from transactions contemplated by
this Agreement. If the allocation provided by the immediately preceding sentence
is unavailable for any reason, the Company and the Investor severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Investor on the other in connection with the statements or omissions
which resulted in such Indemnified Liabilities as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed to be
equal to the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by it, and benefits received
by the Investor shall be deemed to be equal to the total discounts received by
the Investor. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
provided by the Company on the one hand or the Investor on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Investor agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above. The
aggregate amount of Indemnified Liabilities incurred by an Indemnitee and
referred to above in this Article V shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnitee in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this
Section 5.4, the Investor shall not be required to contribute any amount in
excess of the amount by which the Purchase Price for Shares actually purchased
pursuant to this Agreement exceeds the amount of any damages which the Investor
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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. For purposes of this Article V, each Person who
controls the Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each director, officer, employee and agent of
the Investor shall have the same rights to contribution as the Investor, and
each Person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this Section 5.4.

 

15

 

 

5.5           Remedies. The remedies provided for in this Article V are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnitee.

 

5.6           Survival. The obligations of the parties to indemnify or make
contribution under this Article V shall survive termination of this Agreement.

 

ARTICLE VI

COVENANTS OF THE COMPANY

 

6.1           Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.

 

6.2           Listing of Common Stock. The Company shall maintain the Common
Stock’s authorization for quotation on a Principal Market, including the OTC
Markets.

 

6.3           Exchange Act Registration. The Company will cause its Common Stock
to continue to be registered under the Exchange Act, will file in a timely
manner all reports and other documents required of it as a reporting company
under the Exchange Act and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act.

 

6.4           Transfer Agent Instructions. Not later than two (2) business days
after each Advance Notice Date and prior to each Closing and the effectiveness
of the Registration Statement and resale of the Common Stock by the Investor,
the Company will deliver instructions to its transfer agent to issue shares of
Common Stock free of restrictive legends.

 

6.5           Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.

 

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6.6           Notice of Certain Events Affecting Registration; Suspension of
Right to Make an Advance. The Company will immediately notify the Investor upon
its becoming aware of the occurrence of any of the following events in respect
of a Registration Statement or related prospectus relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state governmental authority, during the period
of effectiveness of the Registration Statement, for amendments or supplements to
the Registration Statement or related prospectus; (ii) the issuance by the SEC
or any other Federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or such other
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the related prospectus, it will not
contain any untrue statement of a material fact or omit to state any 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 (v) the Company’s reasonable determination that a post-effective amendment
to the Registration Statement would be appropriate, in which event the Company
will promptly make available to the Investor any such supplement or amendment to
the Registration Statement and related prospectus. The Company shall not deliver
to the Investor any Advance Notice during the continuation of any of the
foregoing events.

 

6.7           Expectations Regarding Advance Notices. Within ten (10) days after
the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company must notify the Investor, in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise during such calendar quarter, if any, through the issuance of Advance
Notices. Such notification shall constitute only the Company’s good faith
estimate and shall in no way obligate the Company to raise such amount, or any
amount, or otherwise limit its ability to deliver Advance Notices.

 

6.8           Intentionally Deleted.

 

6.9           Consolidation; Merger.  The Company shall not, at any time after
the Effective Date, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all the assets of the Company to,
another entity (a “Consolidation Event”), unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Investor such shares of stock and/or securities as
the Investor is entitled to receive pursuant to this Agreement.

 

6.10         Issuance of the Company’s Common Stock.  The sale of the shares of
Common Stock by the Company to the Investor hereunder shall be made in
accordance with the provisions and requirements of the Securities Act and
Regulation D and any applicable state securities law.

 

6.11         Expenses.  The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, will pay
all expenses incident to the performance of its obligations hereunder,
including, without limitation: (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each
related prospectus and of each amendment and supplement thereto; (ii) the
preparation, issuance and delivery of any Shares issued pursuant to this
Agreement; (iii) all fees and disbursements of the Company’s counsel,
accountants and other advisors; (iv) the qualification of the Shares under
securities laws in accordance with the provisions of this Agreement, including
filing fees in connection therewith; (v) the fees and expenses incurred in
connection with the listing or qualification of the Shares for trading on the
Principal Market; or (vi) filing fees of the SEC, the Principal Market and any
other regulatory or governmental body or authority.

 

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6.12         Compliance with Laws. The Company will not, directly or indirectly,
take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company or which caused or resulted in, or which
would in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any security of the Company.

 

6.13         Opinion of Counsel. Prior to the date of the first Advance Notice,
the Investor shall have received an opinion letter from counsel to the Company
reasonably acceptable to the Investor, containing, at a minimum, the opinions
set forth in Exhibit “C” attached hereto.

 

6.14         Review of Public Disclosures.  None of the public disclosures made
by the Company, including, without limitation, press releases, investor
relations materials, and scripts of analysts meetings and calls will contain any
untrue statements of material fact, nor will they omit to state any material
fact required to be stated therein necessary to make the statements made in
light of the circumstances under which they were made, not misleading.

 

6.15         Opinion of Counsel Concerning Resales.  Provided that the
Investor’s resale of Common Stock received pursuant to this Agreement may be
freely sold by the Investor either pursuant to an effective Registration
Statement, in accordance with Rule 144, or otherwise, the Company shall obtain
for the Investor, at the Company’s expense, any and all opinions of counsel
which may be required by the Company’s transfer agent to issue such shares free
of restrictive legends, or to remove legends from such shares.

 

6.16         Sales. Without the written consent of the Investor, the Company
will not, directly or indirectly, offer to sell, sell, contract to sell, grant
any option to sell or otherwise dispose of any shares of Common Stock (other
than the Shares offered pursuant to the provisions of this Agreement) or
securities convertible into or exchangeable for Common Stock, warrants or any
rights to purchase or acquire Common Stock, during the period beginning on the
5th Trading Day immediately prior to an Advance Notice Date and ending on the
2nd Trading Day immediately following the corresponding Advance Settlement Date.

 

6.17         Insider Trading. Notwithstanding any other provision of this
Agreement, the Company shall not deliver an Advance Notice during any period in
which the Investor is in possession of material non-public information.

 

ARTICLE VII

CONDITIONS FOR ADVANCE AND CONDITIONS FOR CLOSING

 

The right of the Company to deliver an Advance Notice and the obligations of the
Investor hereunder to acquire Shares and pay for Shares of the Company’s Common
Stock is subject to the satisfaction by the Company, on each Advance Notice Date
and on each Advance Settlement Date (a “Condition Satisfaction Date”), of each
of the following conditions:

 

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7.1           Accuracy of the Company’s Representations and Warranties.  The
representations and warranties of the Company shall be true and correct in all
material respects.

 

7.2           Registration of the Common Stock with the SEC.  The Company shall
have filed with the SEC a Registration Statement with respect to the resale of
the Registrable Securities in accordance with the terms of the Registration
Rights Agreement. As set forth in the Registration Rights Agreement, the
Registration Statement shall have been declared effective by the SEC and shall
remain effective on each Condition Satisfaction Date, and: (i) neither the
Company nor the Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement, or
that the SEC otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC’s concerns have been addressed and the
Investor is satisfied, in its sdole discretion, that the SEC no longer is
considering or intends to take such action); and (ii) no other suspension of the
use or withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist. The Registration Statement must have been declared
effective by the SEC prior to the first Advance Notice Date.

 

7.3           Authority.  The Company shall have obtained all permits and
qualifications required by any applicable state for the offer and sale of the
Shares, or shall have the availability of exemptions therefrom.  The sale and
issuance of the Shares shall be legally permitted by all laws and regulations to
which the Company is subject.

 

7.4           No Material Notices. None of the following events shall have
occurred and be continuing: (i) receipt by the Company of any request for
additional information from the SEC or any other federal or state governmental,
administrative or self regulatory authority during the period of effectiveness
of the Registration Statement, the response to which would require any
amendments or supplements to the Registration Statement or related prospectus;
(ii) the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the occurrence of any event that makes any statement made in the
Registration Statement or related prospectus, or any document incorporated or
deemed to be incorporated therein by reference, untrue in any material respect
or that requires the making of any changes in the Registration Statement,
related Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the related
prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under and as of the
date which they were made, not misleading; and (v) the Company’s reasonable
determination that a post-effective amendment to the Registration Statement
would be required.

 

7.5           Fundamental Changes. There shall not exist any fundamental changes
to the information set forth in the Registration Statement which would require
the Company to file a post-effective amendment to the Registration Statement.

 

19

 

 

7.6           Performance by the Company.  The Company 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 Company at or prior to each Condition Satisfaction Date.

 

7.7           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 that
prohibits or directly and adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have a
Material Adverse Effect.

 

7.8           No Suspension of Trading in or Delisting of Common Stock.  The
Common Stock is trading on a Principal Market and all of the Shares issuable
pursuant to such Advance Notice will be listed or quoted for trading on such
Principal Market and the Investor believes, in good faith, that trading of the
Common Stock on a Principal Market will continue uninterrupted for the
foreseeable future.  The issuance of Shares with respect to the applicable
Advance Notice will not violate the shareholder approval requirements of the
Principal Market.  The Company shall not have received any notice threatening
the continued listing of the Common Stock on the Principal Market.

 

7.9           Authorized.  There shall be a sufficient number of authorized but
unissued and otherwise unreserved shares of Common Stock for the issuance of all
of the Shares issuable pursuant to such Advance Notice.

 

7.10         Executed Advance Notice.  The Investor shall have received the
Advance Notice executed by an officer of the Company and the representations
contained in such Advance Notice shall be true and correct as of each Condition
Satisfaction Date.

 

7.11         Consecutive Advance Notices.  Except with respect to the first
Advance Notice, the Company shall have delivered all Shares relating to all
prior Advances.

 

ARTICLE VIII

DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

 

8.1           Due Diligence Review. Prior to the filing of the Registration
Statement, the Company shall make available for inspection and review by the
Investor, advisors to and representatives of the Investor and any underwriter
participating in any disposition of the Registrable Securities on behalf of the
Investor pursuant to the Registration Statement, any such Registration Statement
or amendment or supplement thereto, or any blue sky, NASD, FINRA, or other
filing, all financial and other records, all SEC Documents and other filings
with the SEC, and all other corporate documents and properties of the Company as
may be reasonably necessary or required by the Investor and any such advisors,
representatives and underweriters, and cause the Company’s officers, directors
and employees to supply all such information requested by the Investor or any
such representative, advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior to and from time
to time after the filing and effectiveness of the Registration Statement, for
the sole purpose of enabling the Investor and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of the
Registration Statement.

 

20

 

 

8.2           Company Non-Public Information.

 

(a)          Nothing herein shall require the Company to disclose non-public
information to the Investor or its advisors or representatives, unless prior to
disclosure of such information, the Company identifies such information as being
non-public information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require the Investor and its advisors and
representatives to enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Investor.

 

(b)          The Company represents that it does not disseminate non-public
information in violation of the Exchange Act or Securities Act to any investors
who purchase stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding anything herein to
the contrary, the Company will immediately notify the advisors and
representatives of the Investor and, if any, underwriters, of any event or the
existence of any circumstance (without any obligation to disclose the specific
event or circumstance) of which it becomes aware, constituting non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Article VIII shall be construed to mean that such persons or entities
other than the Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public information in the
course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue
statement of material fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.

 

ARTICLE IX

CHOICE OF LAW/JURISDICTION

 

This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Florida, without regard to the principles of conflict of laws. 
The parties further agree that any action between them shall be heard in a
federal or state court in Broward County, Florida, and expressly consent to the
jurisdiction and venue of the state courts in and for the 17th Judicial Circuit,
sitting in Broward County, Florida and the United States District Court for the
Southern District of Florida, for the adjudication of any civil action asserted
pursuant to this paragraph.

 

ARTICLE X

ASSIGNEMNT; TERMINATION

 

10.1         Assignment.  Neither this Agreement nor any rights of the parties
hereto may be assigned or delegated to any other Person.

 

21

 

 

10.2         Termination.

 

(a)          This Agreement and the obligations of Investor to make Advances
hereunder shall terminate on the earlier to occur of: (i) twenty-four (24)
months after the Registration Statement is declared effective; or (ii) six (6)
months after the “Late Effecitve Deadline” (as such term is defined in the
Registration Rights Agreement), if the Registration Statement has not been
declared effective by such date.

 

(a)          This Agreement and the obligation of the Investor to make an
Advance to the Company pursuant to this Agreement shall terminate permanently
(including with respect to an Advance Settlement Date that has not yet occurred)
in the event that: (i) there shall occur any stop order or suspension of the
effectiveness of the Registration Statement for an aggregate of fifty (50)
Trading Days, other than due to the acts of the Investor, during the Commitment
Period (provided, however, that this termination provision shall not apply to
any period commencing upon the filing of a post-effective amendment to such
Registration Statement and ending upon the date on which such post effective
amendment is declared effective by the SEC); or (ii) the Company shall at any
time fail to comply with any of the terms, covenants or provisions of this
Agreement or the Registration Rights Agreement on the part of the Company to
comply with, and such failure is not cured within twenty (20) days after receipt
of written notice from the Investor.

 

(b)          Nothing in this Section 10.2 shall be deemed to release the Company
from any liability for any breach under this Agreement, or to impair the rights
of the Investor to compel specific performance by the Company of its obligations
under this Agreement or the Registration Rights Agreement.  The indemnification
provisions contained in Article V shall survive termination hereunder.

 

ARTICLE XI

NOTICES

 

Any notices, consents, waivers, or other communications required or permitted to
be given under the terms of this Agreement must be in writing and in each case
properly addressed to the party to receive the same in accordance with the
information below, and will be deemed to have been delivered: (i) if mailed by
certified mail, return receipt requested, postage prepaid and properly addressed
to the address below, then three (3) business days after deposit of same in a
regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express,
UPS or other nationally recognized overnight courier service, next business
morning delivery, then one (1) business day after deposit of same in a regularly
maintained receptacle of such overnight courier; or (iii) if hand delivered,
then upon hand delivery thereof to the address indicated on or prior to 5:00
p.m., EST, on a Trading Day. Any notice hand delivered after 5:00 p.m., EST,
shall be deemed delivered on the following Trading Day. Notwithstanding the
foregoing, notice, consents, waivers or other communications referred to in this
Agreement may be sent by facsimile, e-mail, or other method of delivery, but
shall be deemed to have been delivered only when the sending party has confirmed
(by reply e-mail or some other form of written confirmation) that the notice has
been received by the other party.  The addresses and facsimile numbers for such
communications, except for Advance Notices which shall be delivered in
accordance with Section 2.1(b) hereof, shall be:

 

22

 

 

If to the Company, to: Cono Italiano, Inc.   10 Main Street   Keyport, New
Jersey 07735   Attention: Mitchell Brown, President   Telephone: (732) 241-2699
  Facsimile: (732) 728-0314   E-Mail: mitchhb1@comcast.net     With a copy to:
Lucosky Brookman LLP  (which shall not constitute notice) 33 Wood Avenue South,
6th Floor   Iselin, New Jersey 08830   Attention: Joseph Lucosky, Esq.  
Telephone: (732) 395-4400   Facsimile: (732) 395-4401   E-Mail:
jlucosky@lucbro.com     If to the Investor: TCA Global Credit Master Fund, LP  
1404 Rodman Street   Hollywood, Florida 33020   Attention: Robert Press,
Director   Telephone: (786) 323-1650   Facsimile: (786) 323-1651   E-Mail:
bpress@trafcap.com     With a copy to: David Kahan, P.A.  (which shall not
constitute notice) 3125 W. Commercial Blvd., Suite 100   Ft. Lauderdale, Florida
33309   Telephone: (954) 548-3930   Facsimile: (954) 548-3910   E-Mail:
david@dkpalaw.com

 

ARTICLE XII

MISCELLANEOUS

 

12.1         Execution; Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall be deemed and considered
one and the same Agreement, and same shall become effective when counterparts
have been signed by each party and each party has delivered its signed
counterpart to the other party. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format file or other
similar format file, such signature shall be deemed an original for all purposes
and shall create a valid and binding obligation of the party executing same with
the same force and effect as if such facsimile or “.pdf” signature page was an
original thereof.

 

12.2         Entire Agreement; Amendments.  This Agreement, together with the
Registration Rights Agreement, supersedes all other prior oral or written
agreements between the Investor, the Company, their affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement, and the instruments referenced herein, including the Registration
Rights Agreement, contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, the Investor makes no representation, warranty, covenant or
undertaking with respect to such matters.  No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

 

23

 

 

12.3         Reporting Entity for the Common Stock.  The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on any given Trading Day for the purposes of this Agreement shall be
Bloomberg, L.P. or any successor thereto.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.

 

12.4         Fees.

 

(a)          Legal and Administrative Fee.  Each of the parties shall pay its
own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Agreement
and the transactions contemplated hereby, except that the Company shall pay to
Investor, upon the execution of this Agreement by the Company, a fee of $7,500
to cover the Investor’s legal and administrative costs and expenses in
connection this Agreement, $5,000 of which the Investor hereby acknowledges was
paid by the Company prior to the date hereof.

 

(b)          Due Diligence Fees. The Company shall pay to Investor, upon
execution of this Agreement by the Company, a fee of $12,500 to cover the
Investor’s due diligence costs and expenses in connection this Agreement.

 

(c)          Advance Fee. On each Advance Settlement Date, the Company shall pay
to the Investor the Advance Fee with respect to each Advance made hereunder,
which Advance Fee shall be deducted by Investor out of the gross proceeds of
each Advance.

 

(d)          Facility Fee. 

 

(i)          Share Issuance. The Company shall pay to Investor a fee for
structuring the facility contemplated hereby by issuing to Investor that number
of shares of the Company’s Common Stock that equal to a dollar amount equal to
$52,500.00 (the “Share Value”). For purposes of determining the number of shares
issuable to Investor under this Section 12.4(d) (the “Facility Fee Shares”), the
Company’s Common Stock shall be valued at the VWAP as of the close of the
business day immediately prior to the date the Company executes this Agreement
(the “Valuation Date”). The Investor shall confirm to the Company in writing,
the VWAP for the Common Stock as of the Valuation Date, and the corresponding
number of Shares issuable to the Investor based on such price. The Company shall
instruct its transfer agent to issue certificates representing the Facility Fee
Shares issuable to the Investor immediately upon the Company’s execution of this
Agreement, and shall cause its transfer agent to deliver such certificates to
Investor within within three (3) Trading Days from the date the Company executes
this Agreement. In the event such certificates representing the Facility Fee
Shares issuable hereunder shall not be delivered to the Investor within said
three (3) Trading Day period, same shall be an immediate default under this
Agreement and Investor shall have no obligation to make any Advances hereunder
until such default is cured. The Facility Fee Shares, when issued, shall be
deemed to be validly issued, fully paid, and non-assessable shares of the
Company’s Common Stock. The Facility Fee Shares shall be deemed fully earned as
of the date the Company executes this Agreement, regardless of the amount of
Advances, if any, that the Company is able to, or chooses to, request
hereunder.  The Facility Fee Shares shall be deemed Registrable Securities
hereunder and shall be included on any registration statement filed by the
Company after the date hereof, unless such shares may be resold without any
limitation of any kind pursuant to Rule 144.

 

24

 

 

(ii)         Adjustments. It is the intention of the Company and Investor that
the value of the Facility Fee Shares on a date that is nine (9) months after the
Valuation Date (the “Nine Month Valuation Date”) shall be equal to the Share
Value. Valuation of the Facility Fee Shares at the Nine Month Valuation Date
shall be undertaken by Investor using the VWAP of the Common Stock for the five
(5) Trading Days immediately prior to the Nine Month Valuation Date, as reported
by Bloomberg L.P. In the event the value of the Facility Fee Shares issued to
Investor under this Section 12.4(d) (including any proceeds received by the
Investor from sales of the Facility Fee Shares at any time prior to the Nine
Month Valuation Date, if any), at the Nine Month Valuation Date, is less than
the Share Value, then the Investor shall so notify the Company and the Company
hereby agrees to either: (i) immediately pay such shortfall in cash to the
Investor; or (ii) immediately take all required action necessary or required in
order to cause the issuance of additional shares of the Company’s Common Stock
to Investor such that at the Nine Month Valuation Date, the Investor shall have
been issued Facility Fee Shares having an aggregate value, using the valuation
methodology set forth above, equal to the Share Value. In the event the value of
the Facility Shares issued to Investor under this Section 12.4(d) (including any
proceeds received by the Investor from sales of the Facility Fee Shares at any
time prior to the Nine Month Valuation Date), at the Nine Month Valuation Date,
is more than the Share Value, then the Investor shall so notify the Company and
the Investor hereby agrees to return to the Company such number of Facility Fee
Shares such that at the Nine Month Valuation Date, the Investor shall only
retain Facility Fee Shares (or cash proceeds from the sale of Facility Fee
Shares) having an aggregate value, using the valuation methodology set forth
above, equal to the Share Value. In the event an additional issuance is required
at the Nine Month Valuation Date, the Company shall instruct its transfer agent
to issue certificates representing such additional Facility Fee Shares to the
Investor immediately subsequent to the Investor’s notification to the Company
that additional shares are issuable hereunder, and the Company shall in any
event cause its transfer agent to deliver such certificates to Investor within
three (3) Trading Days following the date Investor notifies the Company that
additional shares are to be issued hereunder. In the event such certificates
representing such additional shares issuable hereunder shall not be delivered to
the Investor within said three (3) Trading Day period, same shall be an
immediate default under this Agreement and Investor shall have no obligation to
make any Advances hereunder until such default is cured.

 

12.5         Brokerage.  Each of the parties hereto represents that it has had
no dealings in connection with this transaction with any finder or broker who
will demand payment of any fee or commission from the other party.  The Company
on the one hand, and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
person claiming brokerage commissions or finder’s fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.

 

12.6         Confidentiality.  If for any reason the transactions contemplated
by this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party’s domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herein.

 

25

 

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

26

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date and year set forth above.

 

  COMPANY:       CONO ITALIANO, INC.       By:     Name:     Title:  

 

  INVESTOR:       TCA GLOBAL CREDIT MASTER FUND, LP         By: TCA Global
Credit Fund GP, Ltd., its general partner

 

  By:     Name:     Title:  

 

27

 

 

EXHIBIT “A”

 

FORM OF ADVANCE NOTICE

 

[CONO ITALIANO, INC. LETTERHEAD]

 

The undersigned, ________________________, hereby certifies, with respect to the
sale of shares of Common Stock of Cono Italiano, Inc. (the “Company”) issuable
in connection with this Advance Notice, which Advance Notice is being delivered
pursuant to the Committed Equity Facility between the Company and TCA Global
Credit Master Fund, LP dated as of February 27, 2012 (the “Agreement”), as
follows:

 

1.          The undersigned is the duly elected _______________________ of the
Company.

 

2.          There are no fundamental or material changes to the information set
forth in the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.

 

3.          The Company has performed all of the covenants and agreements to be
performed by the Company under the Agreement, and the Company has complied in
all material respects with all obligations and conditions contained in the
Agreement on or prior to the Advance Notice Date, and the Company shall continue
to perform and comply with all covenants and agreements to be performed by the
Company through the applicable Advance Settlement Date. All conditions under the
Agreement to the delivery of this Advance Notice are satisfied as of the date
hereof. Since the date of the Company’s last financial statements, there has
been no Material Adverse Change.

 

4.          The undersigned hereby represents, warrants and covenants that it
has made all filings (“SEC Filings”) required to be made by it pursuant to
applicable securities laws (including, without limitation, all filings required
under the Securities Exchnage Act of 1934). All SEC Filings and other public
disclosures made by the Company, including, without limitation, all press
releases, analysts meetings, calls, etc. (collectively, the “Public
Disclosures”), have been reviewed and approved for release by the Company’s
attorneys or general counsel and, if containing financial information, the
Company’s independent certified public accountants. None of the Company’s Public
Disclosures 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, in the light of the circumstances under which they were made, not
misleading.

 

5.          The Advance requested by this Advance Notice is for the sale of
__________ Shares.

 

6.          9.99% of the outstanding Common Stock of the Company as of the date
hereof is _____________.

 

7.          The sale of the number of Shares requested by this Advance Notice
does not exceed the Ownership Limitation, the Registration Limitation, the
Maximum Advance Amount or the Commitment Amount.

 

 

 

 

The undersigned has executed this Advance Notice as of the _____ day of
_____________, 20___.

 

CONO ITALIIANO, INC.

 

By:_____________________________

Name:___________________________

Title:____________________________

 

________________________________________________________________

 

Please deliver this Advance Notice by mail, e-mail or facsimile with a follow up
phone call to:

____________________________

____________________________

____________________________

____________________________

 

 

 

 

EXHIBIT “B”

 

FORM OF SETTLEMENT DOCUMENT

 

Via E-Mail and Facsimile

Cono Italiano, Inc.

Attn: CEO

Fax: _________________

E-Mail: mitchhb1@comcast.net

 

Below please find the settlement information with respect to the Advance Notice
dated:___________

 

1. (a) Amount of Advance Notice: $     (b) Amount of Advance Notice after
adjusting for Ownership Limitation, Registration Limitation, Maximum Advance
Amount and Committed Amount, if applicable: $       2.  Market Price: (VWAP of
the Common Stock during the relevant Pricing Period of ________________ to
__________________). $       3.  Purchase Price (Market Price X 95%) per share:
$       4.  Number of Shares due to Investor computed by dividing 1(b) above by
3 above:  

 

Please issue the number of Shares due to the Investor to the account of the
Investor as follows:

______________________

______________________

______________________

 

  Sincerely,       TCA Global Credit Master Fund, LP

 

Approved by:

 

CONO ITALIANO, INC.

 

By:_________________________

Name:______________________

Title:_______________________

 

 

 

 

EXHIBIT “C”

 

REQUIRED OPINIONS

 

1.         The Company is a corporation validly existing and in good standing
under the laws of Nevada, with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Company’s
latest Form 10-K or 10-Q (or similar form for filing a quarterly or annual
report) filed by the Company under the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”) and the rules and regulations of the SEC
thereunder (the “Public Filings”) and to enter into and perform its obligations
under the Committed Equity Facility Agreement (the “Agreement”). The Company is
also duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted by
it as described in the Public Filings makes such qualification necessary.

 

2.         The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreement and to issue the Shares in
accordance with their terms.  The execution and delivery of the Agreement by the
Company and the consummation by it of the transactions contemplated thereby have
been duly authorized by all necessary corporate action, and no further consent
or authorization of the Company or its Board of Directors or stockholders is
required.  The Agreement, and each document executed or delivered in connection
therewith, has each been duly executed and delivered, and the Agreement, and
each document executed or delivered in connection therewith, each constitutes
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as my be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors’ rights and remedies.

 

3.         The Shares are duly authorized and, upon issuance in accordance with
the terms of the Agreement, will be duly and validly issued, fully paid and
non-assessable, free of any liens, encumbrances and preemptive or similar rights
contained, to our knowledge, in any agreement filed by the Company as an exhibit
to the Company’s Public Filings.

 

4.         The execution, delivery and performance of the Agreement by the
Company will not: (i) result in a violation of the Company’s Certificate of
Incorporation or By-Laws; (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement or, indenture by which the Company or any of its
assets or properties is bound, including, without limitation, and agreement or
document filed by the Company as an exhibit to the Company’s Public Filings; or
(iii) to our knowledge, result in a violation of any foreign, federal, state or
local law, rule or regulation, order, judgment or decree applicable to the
Company.

 

5.         To our knowledge, and other then as set forth in the Public Filings,
there are no legal or governmental proceedings pending to which the Company is a
party or of which any property or assets of the Company is subject which is
required to be disclosed in any Public Filings.