Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of March 22, 2007, by
and among Greens Worldwide Incorporated, an Arizona corporation, with
headquarters located at 346 Woodland Church Road, Hertford, NC 27944 (the
“Company”), and each of the purchasers set forth on the signature pages hereto
(the “Buyers”).

WHEREAS:

A. The Company and the Buyers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the rules
and regulations as promulgated by the United States Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933
Act”);

B. The Company and the Buyers entered into that Securities Purchase Agreement
dated as of September 16, 2005, that Securities Purchase Agreement dated as of
July 31, 2006, that Securities Purchase Agreement dated as of September 19,
2006, that Letter Agreement dated as of October 13, 2006, and that Letter
Agreement dated as of November 20, 2006 (collectively, the “Prior Agreements”),
pursuant to which the Buyers purchased secured convertible notes from the
Company in the aggregate principal amount of $4,580,000 (the “Original Notes”)
and warrants (the “Original Warrants”) to purchase 69,000,000 shares of common
stock, no par value per share, of the Company (the “Common Stock”). The Buyers
have converted $58,369.10 of the Original Notes into 583,691 shares of Common
Stock.

C. The Company and the Buyers desire that the Buyers invest an additional
$625,000 in the Company (the “Additional Amount”) and that the parties
restructure the transactions under the Prior Agreements as provided in this
Agreement.

D. The Company and the Buyers desire that any and all amounts due and payable
under the Original Notes shall be surrendered for conversion in the manner
contemplated by Rule 144(d)(iii)(3) as promulgated by the Securities and
Exchange Commission under the authority of the Securities Act of 1933, as
amended, in a restructuring in which the Original Notes and the Additional
Amount shall be combined into new notes in an aggregate principal amount of
$7,807,500, evidenced by secured convertible notes of the Company in form of
attached Exhibit “A” (together with any note(s) issued in replacement thereof or
as a dividend thereon or otherwise with respect thereto in accordance with the
terms thereof, the “Notes”), convertible into shares of Common Stock, upon the
terms and subject to the limitations and conditions set forth in the Notes.

E. The Buyers desire to surrender to the Company for cancellation the Original
Warrants in exchange for the issuance by the Company of warrants to purchase
40,000,000 shares of Common Stock in the aggregate, in the form attached hereto
as Exhibit “B” (the “Warrants”).

F. The Buyers desire to purchase, and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement, the Notes and the
Warrants.

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G. Each Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, such principal amount of the Notes and number of the Warrants as are
set forth immediately below its name on the signature pages hereto.

H. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering (i) a Registration Rights Agreement,
in the form attached hereto as Exhibit “C” (the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder and applicable state securities laws, (ii) a Security Agreement, in
the form attached hereto as Exhibit “D”, and an Intellectual Property Security
Agreement, in the form attached hereto as Exhibit “E” (collectively, the
“Security Agreement”), pursuant to which the Company has agreed to grant to the
Buyers a first priority security interest in certain property of the Company to
secure its obligations hereunder, and (iii) a Release Agreement, in the form
attached hereto as Exhibit “F” (the “Release Agreement” and together with the
Registration Rights Agreement and the Security Agreement, the “Related
Agreements”), pursuant to which the Buyers and certain other Company consultants
have agreed to release any and all interest and rights they may have in and to
the Company or any of its assets before the date of this Agreement.

NOW THEREFORE, the Company and each of the Buyers severally (and not jointly)
hereby agree as follows:

1. PURCHASE AND SALE OF NOTES AND THE WARRANTS.

a. Purchase of Notes and Warrants. On the Closing Date (as defined below), the
Company shall issue and sell to each Buyer and each Buyer severally agrees to
purchase from the Company such principal amount of the Notes and number of the
Warrants as are set forth immediately below such Buyer’s name on the signature
pages hereto.

b. Form of Payment. On the Closing Date (as defined below), (i) the Buyers shall
surrender to the Company for cancellation the Original Notes and the Original
Warrants and shall pay the Additional Amount at the Closing by wire transfer of
immediately available funds to the Company, in accordance with the Company’s
written wiring instructions, against delivery of the Notes and the Warrants in
such amounts as are set forth immediately below the Buyers’ names on the
signature pages hereto, and (ii) the Company shall deliver the Notes and the
Warrants duly executed on behalf of the Company, to the Buyers, against the
cancellation of the Original Notes and the Original Warrants and the payment of
the Additional Amount.

c. Closing Date. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes and the Warrants pursuant to this
Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on
March 22, 2007, or such other mutually agreed upon time. The closing of the
transactions contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date at such location as may be agreed to by the parties.

 

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2. BUYERS’ REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and not
jointly) represents and warrants to the Company solely as to such Buyer that:

a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Notes
and the shares of Common Stock issuable upon conversion of or otherwise pursuant
to the Notes (including, without limitation, such additional shares of Common
Stock, if any, as are issuable as a result of the events described in
Section 2(c) of the Registration Rights Agreement (the “Conversion Shares”)) and
the Warrants and the shares of Common Stock issuable upon exercise thereof (the
“Warrant Shares” and, collectively with the Notes, the Warrants and the
Conversion Shares, the “Securities”) for its own account and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any
of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.

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

c. Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.

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

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

 

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f. Transfer or Re-sale. The Buyer understands that (i) except as provided in the
Registration Rights Agreement, the sale or re-sale of the Securities has not
been and is not being registered under the 1933 Act or any applicable state
securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the
1933 Act, (b) the Buyer shall have delivered to the Company an opinion of
counsel reasonably acceptable to the Company and its counsel that shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration, which
opinion shall be accepted by the Company, (c) the Securities are sold or
transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933
Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or
otherwise transfer the Securities only in accordance with this Section 2(f) and
who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144,
or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a
successor rule) (“Regulation S”), and the Buyer shall have delivered to the
Company an opinion of counsel reasonably acceptable to the Company and its
counsel that shall be in form, substance and scope customary for opinions of
counsel in corporate transactions, which opinion shall be accepted by the
Company; (ii) any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any re-sale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case, other than pursuant to the Registration Rights
Agreement). Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.

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

“The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities may not be sold,
transferred or assigned in the absence of an effective registration statement
for the securities under said Act, or an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold pursuant to Rule 144
or Regulation S under said Act.”

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise

 

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

h. Authorization; Enforcement. This Agreement and the Related Agreements have
been duly and validly authorized. This Agreement has been duly executed and
delivered on behalf of the Buyers, and this Agreement constitutes and, upon
execution and delivery by the Buyers of the Related Agreements, the Related
Agreements will constitute, valid and binding agreements of the Buyers
enforceable in accordance with their terms.

i. Residency. Each Buyer is a resident of the jurisdiction set forth immediately
below such Buyer’s name on the signature pages hereto.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise disclosed
in the Company’s filings with the SEC or in the disclosure schedules to this
Agreement, the Company represents and warrants to each Buyer that:

a. Organization and Qualification. The Company and each of its Subsidiaries (as
defined below), if any, is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated,
with full power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of
the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any document executed in connection with
this financing, (ii) a material and adverse effect on the results of operations,
assets, prospects, business or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the
Company’s ability to perform under any of the documents executed in connection
with this financing. “Subsidiaries” means any corporation or other organization,
whether incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.

 

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b. Authorization; Enforcement. Except with respect to the filing of the
Authorized Share Amendment (as defined below) by the Company with the Arizona
Corporation Commission and having the Authorized Share Amendment declared
effective by the Arizona Corporation Commission, (i) the Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Related Agreements, the Notes and the Warrants and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Related Agreements, the Notes and the Warrants by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Notes and the
Warrants and the issuance and reservation for issuance of the Conversion Shares
and the Warrant Shares issuable upon conversion or exercise thereof) have been
duly authorized by the Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors, or its shareholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company by its authorized representative, and such authorized representative is
the true and official representative with authority to sign this Agreement and
the other documents executed in connection herewith and bind the Company
accordingly, and (iv) this Agreement constitutes, and upon execution and
delivery by the Company of the Related Agreements, the Notes and the Warrants,
each of such instruments will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.

c. Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (i) 100,000,000 shares of Common Stock, of which 32,217,352
shares are issued and outstanding and 105,000,000 shares will be reserved for
issuance upon conversion of the Notes and the exercise of the Warrants (subject
to adjustment pursuant to the Company’s covenant set forth in Section 4(g)
below) after the Authorized Share Amendment is effective under Arizona law, and
(ii) 5,000,000 shares of preferred stock, $10.00 par value per share, of which 0
shares are issued and outstanding. All of such outstanding shares of capital
stock are, or upon issuance will be, duly authorized, validly issued, fully paid
and nonassessable. No shares of capital stock of the Company are subject to
preemptive rights or any other similar rights of the shareholders of the Company
or any liens or encumbrances imposed through the actions or failure to act of
the Company. The Company has furnished to the Buyer true and correct copies of
the Company’s Articles of Incorporation as in effect on the date hereof
(“Articles of Incorporation”), the Company’s By-laws, as in effect on the date
hereof (the “By-laws”), and the terms of all securities convertible into or
exercisable for Common Stock of the Company and the material rights of the
holders thereof in respect thereto. The Company shall provide the Buyer with a
written update of this representation signed by the Company’s Chief Executive or
Chief Financial Officer on behalf of the Company as of the Closing Date.

d. Issuance of Shares. Once the Authorized Share Amendment has been declared
effective by the Arizona Corporation Commission, the Conversion Shares and the
Warrant Shares will be duly authorized and reserved for issuance and, upon
conversion of the Notes and the exercise of the Warrants in accordance with
their respective terms, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of shareholders of the Company and will not impose personal liability
upon the holder thereof.

 

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

f. No Conflicts. The execution, delivery and performance of this Agreement, the
Related Agreements, the Notes and the Warrants by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance of the
Conversion Shares and the Warrant Shares) will not (i) once the Authorized Share
Amendment has been declared effective by the Arizona Corporation Commission,
conflict with or result in a violation of any provision of the Articles of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) once the Authorized Share
Amendment has been declared effective by the Arizona Corporation Commission, to
the Company’s knowledge, result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Once the
Authorized Share Amendment has been declared effective by the Arizona
Corporation Commission, neither the Company nor any of its Subsidiaries will be
in violation of its Articles of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and
no event has occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither the Company
nor any of its Subsidiaries has taken any action or failed to take any action
that would 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 by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, the
Related Agreements, the Notes or the Warrants in accordance with the terms
hereof or thereof or to issue and sell the Notes and the Warrants in accordance
with the terms

 

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hereof and to issue the Conversion Shares upon conversion of the Notes and the
Warrant Shares upon exercise of the Warrants. Except for the consent of Shelter
Island Opportunity Fund, LLC and Topwater Investment Management LLC (which
consent the Company covenants to obtain as soon as reasonably practicable
following the date of this Agreement), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the quotation requirements of the
Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate
that the Common Stock will be removed by the OTCBB in the foreseeable future.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.

g. SEC Documents; Financial Statements. Except as disclosed in Schedule 3(g),
since February 13, 2007 the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and schedules thereto
and documents (other than exhibits to such documents) incorporated by reference
therein, being hereinafter referred to herein as the “SEC Documents”). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time 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 light of
the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior to the date hereof). 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
United States 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 not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to February 13, 2007 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in such financial statements, which, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company.

h. Absence of Certain Changes. Since February 13, 2007, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.

 

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i. Absence of Litigation. There is no action, suit, claim, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company or any
of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. Except as otherwise provided in this
Section 3(i), Schedule 3(i) contains a complete list and summary description of
any pending or, to the knowledge of the Company, threatened proceeding against
or affecting the Company or any of its Subsidiaries, without regard to whether
it would have a Material Adverse Effect. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing. The Company has received notice from many golfers who provided
membership fees to the Company that they are requesting refunds of those
membership fees.

j. Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, except as set forth in Schedule 3(j) hereof, to the best of the
Company’s knowledge, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or proceeding pending,
or to the Company’s knowledge threatened, which challenges the right of the
Company or of a Subsidiary with respect to any Intellectual Property necessary
to enable it to conduct its business as now operated (and, except as set forth
in Schedule 3(j) hereof, to the best of the Company’s knowledge, as presently
contemplated to be operated in the future); to the best of the Company’s
knowledge, the Company’s or its Subsidiaries’ current and intended products,
services and processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and
each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.

k. No Materially Adverse Contracts, Etc. Neither the 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. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.

l. Tax Status. Except as set forth on Schedule 3(l), the Company and each of its
Subsidiaries has made or filed all federal, state and foreign income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or

 

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determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. Except as set forth on Schedule 3(l), none of the Company’s
tax returns is presently being audited by any taxing authority.

m. Certain Transactions. Except as set forth on Schedule 3(m) and except for
arm’s length transactions pursuant to which the Company or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options, none of the officers,
directors, or employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing 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.

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

o. Acknowledgment Regarding Buyers’ Purchase of Securities. The Company
acknowledges and agrees that the Buyers are acting solely in the capacity of
arm’s length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
statement made by any Buyer or any of their respective representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation and is merely incidental to the Buyers’ purchase
of the Securities. The Company further represents to each Buyer that the
Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

 

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

q. No Brokers. Except as set forth in Schedule 3(q), the Company has taken no
action which would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.

r. Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect and except for any violations that
will be remedied after the Authorized Share Amendment has been declared
effective by the Arizona Corporation Commission. Since February 13, 2007,
neither the Company nor any of its Subsidiaries has received any notification
with respect to possible conflicts, defaults or violations of applicable laws,
except for notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse Effect.

s. Environmental Matters.

(i) Except as set forth in Schedule 3(s), there are, to the best of the
Company’s knowledge, with respect to the Company or any of its Subsidiaries or
any predecessor of the Company, no past or present violations of Environmental
Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental liability or any
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or foreign laws and
neither the Company nor any of its Subsidiaries has received any notice with
respect to any of the foregoing, nor is any action pending or, to the Company’s
knowledge, threatened in connection with any of the foregoing. The term
“Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of

 

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Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.

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

(iii) Except as set forth in Schedule 3(s), to the best of the Company’s
knowledge there are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries that are not in
compliance with applicable law.

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

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

v. Internal Accounting Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company’s board of directors, 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.

 

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

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

y. Certain Registration Matters. Assuming the accuracy of the Buyers’
representations and warranties set forth in Section 2, no registration under the
Securities Act is required for the offer and sale of the Conversion Shares and
the Warrant Shares by the Company to the Buyers under the transaction documents.
Except as specified in Schedule 3(y), the Company has not granted or agreed to
grant to any Person any rights (including “piggy-back” registration rights) to
have any securities of the Company registered with the SEC or any other
governmental authority that have not been satisfied.

4. COVENANTS.

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

b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyers at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to each
Buyer on or prior to the Closing Date; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto to (i) qualify
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 4(b), (ii) subject itself to general taxation in
any such jurisdiction, (iii) file a general consent to service of process in any
such jurisdiction, (iv) provide any undertakings that cause the Company undue
expense or burden, or (v) make any change in its charter or bylaws, which in
each case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its shareholders.

c. Reporting Status; Eligibility to Use Form S-3, SB-2 or Form S-1. The
Company’s Common Stock is registered under Section 12(g) of the 1934 Act. The
Company represents and warrants that it does not meet the requirements for the
use of Form S-3.

 

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Although the Company is not so eligible as of the Filing Date (as defined in the
Registration Rights Agreement), the Company may use the form of registration for
which it is eligible at that time for registration of the sale by the Buyers of
the Registrable Securities (as defined in the Registration Rights Agreement). So
long as the Buyer beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination. The Company further agrees
to file all reports required to be filed by the Company with the SEC in a timely
manner so as to become eligible, and thereafter to maintain its eligibility, for
the use of Form S-3. The Company shall issue a press release describing the
material terms of the transaction contemplated hereby as soon as practicable
following the Closing Date but in no event more than two (2) business days of
the Closing Date, which press release shall be subject to prior review by the
Buyers. The Company agrees that such press release shall not disclose the name
of the Buyers unless expressly consented to in writing by the Buyers or unless
required by applicable law or regulation, and then only to the extent of such
requirement.

d. Use of Proceeds. The Company shall use the net proceeds from the sale of the
Notes and the Warrants in the manner set forth in Schedule 4(d) attached hereto
and made a part hereof and shall not, directly or indirectly, use such proceeds
for (i) any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its currently existing
direct or indirect Subsidiaries); (ii) the satisfaction of any portion of the
Company’s debt (other than payment of trade payables and accrued expenses in the
ordinary course of the Company’s business and consistent with prior past
practices), or (iii) the redemption of any Common Stock.

e. Expenses. At the Closing, the Company shall reimburse the Buyers for expenses
incurred by them in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the other agreements to be
executed in connection herewith (“Documents”), including, without limitation,
attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for
stock quotation services, fees relating to any amendments or modifications of
the Documents or any consents or waivers of provisions in the Documents, fees
for the preparation of opinions of counsel, escrow fees, and costs of
restructuring the transactions contemplated by the Documents. When possible, the
Company must pay these fees directly, otherwise the Company must make immediate
payment for reimbursement to the Buyers for all fees and expenses immediately
upon written notice by the Buyer or the submission of an invoice by the Buyer.
Notwithstanding anything herein to the contrary, the Company’s obligation to
reimburse Buyers’ expenses shall not exceed $50,000 in the aggregate.

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

 

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g. Authorization and Reservation of Shares. The Company agrees to amend its
Articles of Incorporation after the Closing to increase the number of authorized
shares of Common Stock (the “Authorized Share Amendment”). The Company shall,
once the Authorized Share Amendment has been declared effective by the Arizona
Corporation Commission, at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock to provide
for the full conversion or exercise of the outstanding Notes and Warrants and
issuance of the Conversion Shares and the Warrant Shares in connection therewith
(based on the Conversion Price (as defined in the Notes) of the Notes or the
Exercise Price (as defined in the Warrants) of the Warrants). The Company shall
not reduce the number of shares of Common Stock reserved for issuance upon
conversion of the Notes and exercise of the Warrants without the consent of each
Buyer. Once the Authorized Share Amendment has been declared effective by the
Arizona Corporation Commission, the Company shall at all times maintain the
number of shares of Common Stock so reserved for issuance at an amount
(“Reserved Amount”) equal to the number that is then actually issuable upon full
conversion of the Notes and upon exercise of the Warrants (based on the
Conversion Price of the Notes and the Exercise Price of the Warrants in effect
from time to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance (“Authorized and Reserved Shares”) is below
the Reserved Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company’s obligations under this Section in the
case of an insufficient number of authorized shares, obtaining shareholder
approval of an increase in such authorized number of shares, and voting the
management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is
sufficient to meet the Reserved Amount. In order to ensure that the Company has
authorized a sufficient amount of shares to meet the Reserved Amount at all
times, the Company must deliver to the Buyer at the end of every month a list
detailing (1) the current amount of shares authorized by the Company and
reserved for the Buyers; and (2) amount of shares issuable upon conversion of
the Notes and exercise of the Warrants and as payment of interest accrued on the
Notes for one year.

h. Listing. The Company shall promptly secure the listing of the Conversion
Shares and the Warrant Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and, so long as any Buyer owns
any of the Securities, shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Conversion Shares and Warrant
Shares from time to time issuable upon conversion of the Notes or exercise of
the Warrants. The Company will obtain and, so long as any Buyer owns any of the
Securities, maintain the listing and trading of its Common Stock on the OTCBB or
any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the
Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange
(“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of the National Association of Securities Dealers (“NASD”) and
such exchanges, as applicable. The Company shall promptly provide to each

 

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Buyer copies of any notices it receives from the OTCBB and any other exchanges
or quotation systems on which the Common Stock is then listed regarding the
continued eligibility of the Common Stock for listing on such exchanges and
quotation systems.

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

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

k. Restriction on Short Sales. The Buyers agree that, so long as any of the
Notes remain outstanding, but in no event less than two (2) years from the date
hereof, the Buyers will not enter into or effect any “short sales” (as such term
is defined in Rule 3b-3 of the 1934 Act) of the Common Stock or hedging
transaction which establishes a net short position with respect to the Common
Stock.

5. TRANSFER AGENT INSTRUCTIONS. Once the Authorized Share Amendment has been
declared effective by the Arizona Corporation Commission, the Company shall
issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of each Buyer or its nominee, for the Conversion Shares
and the Warrant Shares in such amounts as specified from time to time by each
Buyer to the Company upon conversion of the Notes or exercise of the Warrants in
accordance with the terms thereof (the “Irrevocable Transfer Agent
Instructions”). Prior to registration of the Conversion Shares and the Warrant
Shares under the 1933 Act or the date on which the Conversion Shares and the
Warrant Shares may be sold pursuant to Rule 144 without any restriction as to
the number of Securities as of a particular date that can then be immediately
sold, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5,
and stop transfer instructions to give effect to Section 2(f) hereof (in the
case of the Conversion Shares and the Warrant Shares, prior to registration of
the Conversion Shares and the Warrant Shares under the 1933 Act or the date on
which the Conversion Shares and the Warrant Shares may be sold pursuant to Rule
144 without any restriction as to the number of Securities as of a particular
date that can then be immediately sold), will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set forth in
Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If a Buyer provides the
Company with (i) an

 

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opinion of counsel reasonably acceptable to the Company and its counsel in form,
substance and scope customary for opinions in comparable transactions, to the
effect that a public sale or transfer of such Securities may be made without
registration under the 1933 Act and such sale or transfer is effected or
(ii) the Buyer provides reasonable assurances that the Securities can be sold
pursuant to Rule 144, the Company shall permit the transfer, and, in the case of
the Conversion Shares and the Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates, free from restrictive legend, in such
name and in such denominations as specified by such Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyers, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 may be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that the Buyers shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required.

6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The obligation of the Company
hereunder to issue and sell the Notes and the Warrants to the Buyers at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:

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

b. The Buyers shall have delivered the Original Notes and the Original Warrants
for cancellation and paid the Additional Amount in accordance with Section 1(b)
above.

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

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

e. The Buyers shall surrender for cancellation stock certificates for 3,415,520
and 2,500,000 shares of Common Stock currently held as security for R. Thomas
Kidd’s (“Kidd”) guarantee of the Company’s obligations to the Buyers under the
Prior Agreements, acknowledging that Kidd was responsible for delivering this
collateral to the Buyers, not the Company.

 

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7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. The obligation of the
Buyers hereunder to purchase the Notes and the Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for the Buyers’ sole
benefit and may be waived by the Buyers at any time in their sole discretion:

a. The Company shall have executed this Agreement and the Related Agreements and
delivered the same to the Buyers.

b. The Company shall have delivered to the Buyers duly executed Notes and
Warrants in accordance with Section 1(b) above.

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

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

e. No event shall have occurred which could reasonably be expected to have a
Material Adverse Effect on the Company.

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

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

8. GOVERNING LAW; MISCELLANEOUS.

a. Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS

 

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LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS
AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY
REGISTERED FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL
FEES AND EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, INCURRED BY THE
PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

b. Counterparts; Signatures by Facsimile. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

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

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

e. Entire Agreement; Amendments. This Agreement and the instruments referenced
herein 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, neither the Company nor the Buyers make any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

f. Notices. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:

If to the Company:

Greens Worldwide Incorporated

346 Woodland Church Road

Hertford, NC 27944

Attention: Chief Executive Officer

Telephone: (252) 264-2064

Facsimile: (252) 264-2068

 

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With a copy to:

Williams Mullen

222 Central Park Avenue, Suite 1700

Virginia Beach, VA 23462

Attention: John M. Paris Jr., Esq.

Telephone: (757) 473-5308

Facsimile: (757) 473-0395

If to a Buyer: To the address set forth immediately below such Buyer’s name on
the signature pages hereto.

With copy to:

Ballard Spahr Andrews & Ingersoll, LLP

1735 Market Street

51st Floor

Philadelphia, Pennsylvania 19103

Attention: Gerald J. Guarcini, Esq.

Telephone: 215-864-8625

Facsimile: 215-864-8999

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

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

h. Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

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i. Survival. The representations, warranties, agreements and covenants of the
parties shall survive the Closing hereunder for a period of six months
notwithstanding any due diligence investigation conducted by or on behalf of any
party. Each party agrees to indemnify and hold harmless the others and all their
officers, directors, employees and agents, for loss or damage arising as a
result of or related to any breach or alleged breach by such party of any of its
representations, warranties, agreements and covenants under this Agreement or
the Related Agreements, including, with respect to the Company, advancement of
expenses as they are incurred.

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

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

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

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

 

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

 

GREENS WORLDWIDE INCORPORATED

/s/ William Conwell

William Conwell Chief Executive Officer AJW PARTNERS, LLC By: SMS Group, LLC

/s/ Corey S. Ribotsky

Corey S. Ribotsky Manager

 

RESIDENCE:   Delaware ADDRESS:   1044 Northern Boulevard   Suite 302   Roslyn,
New York 11576   Facsimile:   (516) 739-7115   Telephone:   (516) 739-7110

 

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Notes:

   $ 390,375

Number of Warrants:

     2,000,000

Aggregate Portion of Additional Amount:

   $ 31,250

 

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AJW OFFSHORE, LTD. By: First Street Manager II, LLC

/s/ Corey S. Ribotsky

Corey S. Ribotsky Manager

 

RESIDENCE:

  Cayman Islands ADDRESS:   AJW Offshore, Ltd.   P.O. Box 32021 SMB   Grand
Cayman, Cayman Island, B.W.I. AGGREGATE SUBSCRIPTION AMOUNT:

 

Aggregate Principal Amount of Notes:

   $ 6,246,000

Number of Warrants:

     32,000,000

Aggregate Portion of Additional Amount:

   $ 500,000

 

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AJW QUALIFIED PARTNERS, LLC By: AJW Manager, LLC

/s/ Corey S. Ribotsky

Corey S. Ribotsky Manager

 

RESIDENCE:   New York ADDRESS:   1044 Northern Boulevard   Suite 302   Roslyn,
New York 11576   Facsimile:   (516) 739-7115   Telephone:   (516) 739-7110
AGGREGATE SUBSCRIPTION AMOUNT:

 

Aggregate Principal Amount of Notes:

   $ 936,900

Number of Warrants:

     4,800,000

Aggregate Portion of Additional Amount:

   $ 75,000

 

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NEW MILLENNIUM CAPITAL PARTNERS II, LLC By: First Street Manager II, LLP

/s/ Corey S. Ribotsky

Corey S. Ribotsky Manager

 

RESIDENCE:   New York ADDRESS:   1044 Northern Boulevard   Suite 302   Roslyn,
New York 11576   Facsimile:   (516) 739-7115   Telephone:   (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

 

Aggregate Principal Amount of Notes:

   $ 234,225

Number of Warrants:

     1,200,000

Aggregate Portion of Additional Amount:

   $ 18,750

 

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Schedule 3(a)

Subsidiaries

 

Subsidiary

  

State of Incorporation

US Pro Golf Tour, Inc.    Delaware New England Pro Tour, Inc.    Massachusetts
Las Vegas Golf Schools, Inc.    Nevada American Challenge Golf Tour, Inc.   
Delaware Players Tour, Inc.    Delaware BreakThru Media, Inc.    Nevada
Crowley & Company Advertising, Inc.    Florida Still Moving, Inc.    Florida

 

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Schedule 3(t)

Liens

Lien evidenced by UCC-1 Financing Statement No. 200614472729, filed with the
Arizona Secretary of State by Shelter Island Opportunity Fund, LLC and Topwater
Investment Management LLC on October 20, 2006, covering all assets and all
personal property, whether now owned and/or hereafter acquired.

 

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