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SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated as of and
effective as of December 19, 2014 (the “Effective Date”), by and between
MAMAMANCINI’S HOLDINGS, INC., a corporation incorporated under the laws of the
State of Nevada (the “Company”), and MANATUCK HILL PARTNERS, LLC, a limited
liability company organized and existing under the laws of the State of Delaware
(the “Buyer”).

 

WHEREAS, Buyer desires to purchase from Company, and the Company desires to sell
and issue to Buyer, upon the terms and subject to the conditions contained
herein, a Two Million United States Dollars (US$2,000,000) convertible,
redeemable debenture (in the form attached hereto as Exhibit A, the
“Debenture”), for the total purchase price of Two Million United States Dollars
(US$2,000,000) (the “Purchase Price”);

 

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

RECITALS, EXHIBITS, SCHEDULES

 

The foregoing recitals are true and correct and, together with the Schedules and
Exhibits referred to hereafter, are hereby incorporated into this Agreement by
this reference.

 

ARTICLE II

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:

 

2.1 “Affiliate” means, with respect to a Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, such Person
at any time during the period for which the determination of affiliation is
being made. For purposes of this definition, the term “control,” “controlling”
“controlled” and words of similar import, when used in this context, means, with
respect to any Person, the possession, directly or indirectly, of the power to
direct, or cause the direction of, management policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

 

2.2 “Assets” means all of the properties and assets of the Person in question,
as the context may so require, whether real, personal or mixed, tangible or
intangible, wherever located, whether now owned or hereafter acquired.

 

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2.3 “Business Day” shall mean any day other than a Saturday, Sunday or a legal
holiday on which federal banks are authorized or required to be closed for the
conduct of commercial banking business.

 

2.4 “Claims” means any Proceedings, Judgments, Obligations, threats, losses,
damages, deficiencies, settlements, assessments, charges, costs and expenses of
any nature or kind.

 

2.5 “Common Stock” means the common stock of the Company, par value $0.00001 per
share.

 

2.6 “Consent” means any consent, approval, order or authorization of, or any
declaration, filing or registration with, or any application or report to, or
any waiver by, or any other action (whether similar or dissimilar to any of the
foregoing) of, by or with, any Person, which is necessary in order to take a
specified action or actions, in a specified manner and/or to achieve a specific
result.

 

2.7 “Contract” means any written or oral contract, agreement, order or
commitment of any nature whatsoever, including, any sales order, purchase order,
lease, sublease, license agreement, services agreement, loan agreement,
mortgage, security agreement, guarantee, management contract, employment
agreement, consulting agreement, partnership agreement, shareholders agreement,
buy-sell agreement, option, warrant, debenture, subscription, call or put.

 

2.8 “Debenture” shall have the meaning given to it in the preamble hereof.

 

2.9 “Effective Date” means the date so defined in the introductory paragraph of
this Agreement.

 

2.10 “Encumbrance” means any lien, security interest, pledge, mortgage,
easement, leasehold, assessment, tax, covenant, restriction, reservation,
conditional sale, prior assignment, or any other encumbrance, claim, burden or
charge of any nature whatsoever.

 

2.11 “Environmental Requirements” means all Laws and requirements relating to
human, health, safety or protection of the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
Hazardous Materials in the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), or
otherwise relating to the treatment, storage, disposal, transport or handling of
any Hazardous Materials.

 

2.12 “GAAP” means generally accepted accounting principles, methods and
practices set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants, and
statements and pronouncements of the Financial Accounting Standards Board, or of
such other Person as may be approved by a significant segment of the U.S.
accounting profession, in each case as of the date or period at issue, and as
applied in the U.S. to U.S. companies.

 

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2.13 “Governmental Authority” means any foreign, federal, state or local
government, or any political subdivision thereof, or any court, agency or other
body, organization, group, stock market or exchange exercising any executive,
legislative, judicial, quasi-judicial, regulatory or administrative function of
government.

 

2.14 “Hazardous Materials” means: (i) any chemicals, materials, substances or
wastes which are now or hereafter become defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,”
“toxic pollutants” or words of similar import, under any Law; and (iii) any
other chemical, material, substance, or waste, exposure to which is now or
hereafter prohibited, limited or regulated by any Governmental Authority.

 

2.15 “Judgment” means any order, writ, injunction, fine, citation, award,
decree, or any other judgment of any nature whatsoever of any Governmental
Authority.

 

2.16 “Law” means any provision of any law, statute, ordinance, code,
constitution, charter, treaty, rule or regulation of any Governmental Authority.

 

2.17 “Leases” means all leases for real or personal property.

 

2.18 “Material Adverse Effect” shall mean: (i) a material adverse change in, or
a material adverse effect upon, the Assets, business, prospects, properties,
financial condition or results of operations of the Company; (ii) a material
impairment of the ability of the Company to perform any of its Obligations under
any of the Transaction Documents; or (iii) a material adverse effect on: (A) the
legality, validity, binding effect or enforceability against the Company of any
of the Transaction Documents; (B) the rights or remedies of the Buyer under any
of the Transaction Documents; or (C) a material adverse effect or impairment on
the Buyer’s ability to sell the shares of the Company’s Common Stock issuable to
Buyer under any Transaction Documents without limitation or restriction. For
purposes of determining whether any of the foregoing changes, effects,
impairments, or other events have occurred, such determination shall be made by
Buyer, in its sole, but reasonably exercised, discretion.

 

2.19 “Material Contract” shall mean any Contract to which the Company is a party
or by which the Company or any of its Assets are bound and which: (i) must be
disclosed to any Governmental Authority or any other laws, rules or regulations
of any Governmental Authority (including without limitation U.S. federal
securities laws); (ii) involves aggregate payments of One Hundred Thousand
United States Dollars (US$100,000) or more to or from the Company; (iii)
involves delivery, purchase, licensing or provision, by or to the Company, of
any goods, services, assets or other items having a value (or potential value)
over the term of such Contract of One Hundred Thousand United States Dollars
(US$100,000) or more or is otherwise material to the conduct of the Company’s
business as now conducted and as contemplated to be conducted in the future;
(iii) involves a Company Lease; (iv) imposes any guaranty, surety or
indemnification Obligations on the Company; or (v) prohibits the Company from
engaging in any business or competing anywhere in the world.

 

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2.20 “Obligation” means, now existing or in the future, any debt, liability or
obligation of any nature whatsoever (including any required performance of any
covenants or agreements), whether secured, unsecured, recourse, nonrecourse,
liquidated, unliquidated, accrued, voluntary or involuntary, direct or indirect,
absolute, fixed, contingent, ascertained, unascertained, known, unknown, whether
or not jointly owed with others, whether or not from time to time decreased or
extinguished and later decreased, created or incurred, or obligations under
Contracts, existing or incurred under this Agreement or the Debenture, as such
obligations may be amended, supplemented, converted, extended or modified from
time to time.

 

2.21 “Ordinary Course of Business” means the ordinary course of business of the
Person in question, consistent with past custom and practice (including with
respect to quantity, quality and frequency).

 

2.22 “OTC Markets” means the OTC Markets Group, Inc.

 

2.23 “Permit” means any license, permit, approval, waiver, order, authorization,
right or privilege of any nature whatsoever, granted, issued, approved or
allowed by any Governmental Authority.

 

2.24 “Person” means any individual, sole proprietorship, joint venture,
partnership, company, corporation, association, cooperation, trust, estate,
Governmental Authority, or any other entity of any nature whatsoever.

 

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

 

2.26 “Proceeding” means any demand, claim, suit, action, litigation,
investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.

 

2.27 “Qualified Offering” shall mean any equity financing pursuant to which the
Company sells, in one or more related transactions, shares of Series B Preferred
with aggregate proceeds to the Company of not less than Three Million United
States Dollars (US$3,000,000), including any and all warrants which are
exercisable into Common Stock (with such amount exercisable considered aggregate
proceeds of the Company).

 

2.28 “Real Property” means any real estate, land, building, structure,
improvement, fixture or other real property of any nature whatsoever, including,
but not limited to, fee and leasehold interests.

 

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2.29 “Registrable Securities” shall mean the Common Stock underlying the Series
B Preferred and the Common Stock issuable to the Buyer pursuant to this
Agreement and any other Transaction Document.

 

2.30 “Registration Statement” means a registration statement under the
Securities Act which covers the Registrable Securities.

 

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

 

2.32 “Securities” means, collectively, the Debentures, the Series B Preferred
(as defined herein), and any additional shares of Common Stock issuable (i) in
connection with a conversion of the Debentures or (ii) issuance in accordance
with Section 7.3 or any other terms or provision of this Agreement or any other
Transaction Documents.

 

2.33 “Series B Preferred” shall mean the Company’s Series B Convertible
Preferred Stock, par value per share to be determined following the date hereof,
or such other series of convertible preferred stock to be designated by the
Company and offered pursuant to the Qualified Offering.

 

2.34 “Tax” means (i) any foreign, federal, state or local income, profits, gross
receipts, franchise, sales, use, occupancy, general property, real property,
personal property, intangible property, transfer, fuel, excise, accumulated
earnings, personal holding company, unemployment compensation, social security,
withholding taxes, payroll taxes, or any other tax of any nature whatsoever,
(ii) any foreign, federal, state or local organization fee, qualification fee,
annual report fee, filing fee, occupation fee, assessment, rent, or any other
fee or charge of any nature whatsoever, or (iii) any deficiency, interest or
penalty imposed with respect to any of the foregoing.

 

2.35 “Tax Return” means any tax return, filing, declaration, information
statement or other form or document required to be filed in connection with or
with respect to any Tax.

 

2.36 “Transaction Documents” means this Agreement any and all documents or
instruments executed or to be executed by the Company in connection with this
Agreement, including the Debenture, together with all modifications, amendments,
extensions, future advances, renewals, and substitutions thereof.

 

ARTICLE III

INTERPRETATION

 

In this Agreement, unless the express context otherwise requires: (i) the words
“herein,” “hereof” and “hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement; (ii)
references to the words “Article” or “Section” refer to the respective Articles
and Sections of this Agreement, and references to “Exhibit” or “Schedule” refer
to the respective Exhibits and Schedules annexed hereto; (iii) references to a
“party” mean a party to this Agreement and include references to such party’s
permitted successors and permitted assigns; (iv) references to a “third party”
mean a Person not a party to this Agreement; (v) references to the words “share”
or “shareholder”, if in reference to the Company, shall refer to “units” or
“unitholder” respectively and (v) the terms “dollars” and “$” means U.S.
dollars; (vi) wherever the word “include,” “includes” or “including” is used in
this Agreement, it will be deemed to be followed by the words “without
limitation”.

 

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ARTICLE IV

PURCHASE AND SALE OF DEBENTURE

 

4.1 Purchase and Sale of Debenture. Subject to the satisfaction (or waiver) of
the terms and conditions of this Agreement, Buyer agrees to purchase, and
Company agrees to sell and issue to Buyer, the Debenture in the amount of the
Purchase Price.

 

4.2 Closing Date. The purchase and sale of the Debenture shall be for Two
Million United States Dollars (US$2,000,000), and shall take place on the
Effective Date, or such later date as the Company and the Buyer may agree in
writing, subject to satisfaction of the conditions set forth in this Agreement
(the “Closing Date”). The Debenture shall be issued in the name of registered
holder set forth on Exhibit B hereto.

 

4.3 Form of Payment. Subject to the satisfaction of the terms and conditions of
this Agreement, on the Closing Date: (i) the Buyer shall deliver to the Company,
to a Company account designated by the Company, the Purchase Price for the
Debenture to be issued and sold to Buyer, minus the fees to be paid directly
from the proceeds as set forth in this Agreement, in the form of wire transfers
of immediately available U.S. dollars; and (ii) the Company shall deliver to
Buyer the Securities which Buyer is purchasing hereunder, duly executed on
behalf of the Company, together with any other documents required to be
delivered pursuant to this Agreement.

 

ARTICLE V

BUYER’S REPRESENTATIONS AND WARRANTIES

 

Buyer represents and warrants to the Company, that:

 

5.1 Investment Purpose. Buyer is acquiring the Securities for its own account
for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof.

 

5.2 Accredited Buyer Status. Buyer is an “accredited investor” as that term is
defined in Rule 501 of Regulation D, as promulgated under the Securities Act of
1933.

 

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

 

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5.4 Information. Buyer and its advisors, if any, have been furnished with all
materials they have requested relating to the business, finances and operations
of the Company and information Buyer deemed material to making an informed
investment decision regarding its purchase of the Securities. Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management and have received response from the Company or
management satisfactory to the Buyer Neither such inquiries, nor any materials
provided to Buyer, nor any other due diligence investigations conducted by Buyer
or its advisors, if any, or its representatives, shall modify, amend or affect
Buyer’s right to fully rely on the Company’s representations and warranties
contained in Article VI below. Buyer understand that its investment in the
Securities involved a high degree of risk. Buyer is in a position regarding the
Company, which, based upon economic bargaining power, enabled and enables Buyer
to obtain information from the Company in order to evaluate the merits and risks
of this investment. Buyer has sought such accounting, legal and tax advice as it
has considered necessary to make an informed investment decision with respect to
its acquisition of the Securities.

 

5.5 No Governmental Review. Buyer understands that no United States federal or
state Governmental Authority has passed on or made any recommendation or
endorsement of the Securities, or the fairness or suitability of the investment
in the Securities, nor have such Governmental Authorities passed upon or
endorsed the merits of the offering of the Securities.

 

5.6 Authorization, Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of Buyer and is a valid and binding
agreement of Buyer, enforceable in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

To induce the Buyer to purchase the Securities, the Company makes the following
representations and warranties to Buyer, each of which shall be true and correct
in all respects as of the date of the execution and delivery of this Agreement,
and which shall survive the execution and delivery of this Agreement:

 

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6.1 Organization. The Company is a corporation, duly incorporated, validly
existing and in good standing under the Laws of the State of Nevada. The Company
has the full power and authority and all necessary certificates, licenses,
approvals and Permits to: (i) enter into and execute this Agreement and the
Transaction Documents and to perform all of its Obligations hereunder and
thereunder; and (ii) own and operate its Assets and properties and to conduct
and carry on its business as and to the extent now conducted. The Company is
duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the character of its business or the
ownership or use and operation of its Assets or properties requires such
qualification. The exact legal name of the Company is as set forth in the
preamble to this Agreement, and the Company does not currently conduct, nor has
the Company, during the last five (5) years conducted, business under any other
name or trade name, except for Mascot Properties, Inc.

 

6.2 Authority and Approval of Agreement; Binding Effect. The execution and
delivery by Company of this Agreement and the Transaction Documents, and the
performance by Company of all of its Obligations hereunder and thereunder,
including the issuance of the Securities, have been duly and validly authorized
and approved by the Company and its board of directors pursuant to all
applicable Laws and no other action or Consent on the part of Company, its board
directors or any other Person is necessary or required by the Company to execute
this Agreement and the Transaction Documents, consummate the transactions
contemplated herein and therein, perform all of Company’s Obligations hereunder
and thereunder, or to issue the Securities. This Agreement and each of the
Transaction Documents have been duly and validly executed by Company (and the
officer executing this Agreement and all such other Transaction Documents is
duly authorized to act and execute same on behalf of Company) and constitute the
valid and legally binding agreements of Company, enforceable against Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

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6.3 Capitalization. The authorized capital stock of the Company consists of two
hundred fifty million (250,000,000) shares of Common Stock and twenty million
(20,000,000) shares of blank check preferred stock, par value $0.00001 per share
(the “Preferred Stock”), of which Twenty Five Million Eight Hundred Seven
Thousand Three Hundred Seventy Six (25,807,376) shares of Common Stock are
issued and outstanding as of the date hereof, and zero (0) shares of Preferred
Stock are issued and outstanding as of the date hereof. All of such outstanding
shares have been validly issued and are fully paid and nonassessable, have been
issued in compliance with all foreign, federal and state securities laws and
none of such outstanding shares were issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. As of the
Effective Date, no shares of the Company’s capital stock are subject to
preemptive rights or any other similar rights or any Claims or Encumbrances
suffered or permitted by the Company. The Common Stock is currently quoted on
the QTCQB under the trading symbol “MMMB”. The Company has received no notice,
either oral or written, with respect to the continued eligibility of the Common
Stock for quotation on the Principal Trading Market, and the Company has
maintained all requirements on its part for the continuation of such quotation.
Except as disclosed in the “Public Documents” (as hereinafter defined) and
except for the Securities to be issued pursuant to this Agreement, 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, notes, credit
agreements, credit facilities or other Contracts or instruments evidencing
indebtedness of the Company or any of its Subsidiaries, or by which the Company
or any of its Subsidiaries is or may become bound; (iii) there are no
outstanding registration statements with respect to the Company or any of its
securities; (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); (v)
there are no financing statements securing obligations filed in connection with
the Company or any of its Assets; (vi) 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; and (vii) there are no outstanding securities or
instruments of the Company which contain any redemption or similar provisions,
and there are no Contracts by which the Company is or may become bound to redeem
a security of the Company. The Company has furnished to the Buyer true, complete
and correct copies of: (I) the Company’s Certificate of Incorporation, as
amended and as in effect on the date hereof; and (II) the Company’s Bylaws, as
in effect on the date hereof (together, the “Organizational Documents”). Except
for the Organizational Documents or as disclosed in the Public Documents, there
are no other shareholder agreements, voting agreements or other Contracts of any
nature or kind that restrict, limit or in any manner impose Obligations on the
governance of the Company. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and
sale of the Securities.

 

6.4 No Conflicts; Consents and Approvals. The execution, delivery and
performance of this Agreement and the Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby, including the
issuance of any of the Securities, will not: (i) constitute a violation of or
conflict with the Organizational Documents of the Company; (ii) constitute a
violation of, or a default or breach under (either immediately, upon notice,
upon lapse of time, or both), or conflicts with, or gives to any other Person
any rights of termination, amendment, acceleration or cancellation of, any
provision of any Contract to which Company is a party or by which any of its
Assets or properties may be bound; (iii) constitute a violation of, or a default
or breach under (either immediately, upon notice, upon lapse of time, or both),
or conflict with, any Judgment; (iv) constitute a violation of, or conflict
with, any Law (including United States federal and state securities Laws); or
(v) result in the loss or adverse modification of, or the imposition of any
fine, penalty or other Encumbrance with respect to, any Permit granted or issued
to, or otherwise held by or for the use of, Company or any of Company’s Assets.
The Company is not in violation of its Organizational Documents and the Company
is not in default or breach (and no event has occurred which with notice or
lapse of time or both could put the Company in default or breach) under, and the
Company has not taken any action or failed to take any action that would give to
any other Person any rights of termination, amendment, acceleration or
cancellation of, any Contract to which the Company is a party or by which any
property or Assets of the Company are bound or affected. The businesses of the
Company are not being conducted, and shall not be conducted so long as Buyer
owns any of the Securities, in violation of any Law. Except as specifically
contemplated by this Agreement, the Company is not required to obtain any
Consent of, from, or with any Governmental Authority, or any other Person, in
order for it to execute, deliver or perform any of its Obligations under this
Agreement or the Transaction Documents in accordance with the terms hereof or
thereof, or to issue and sell the Securities in accordance with the terms
hereof. All Consents which the Company is required to obtain pursuant to the
immediately preceding sentence have been obtained or effected on or prior to the
date hereof. The Company is not aware of any facts or circumstances which might
give rise to any of the foregoing.

 

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6.5 Issuance of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms hereof, shall be duly issued, fully paid
and non-assessable, and free from all Encumbrances with respect to the issue
thereof, and will be issued in compliance with all applicable United States
federal and state securities Laws.

 

6.6 Public Documents; Financial Statements. The Company has filed all reports
required to be filed by it under the 1933 Act and the Securities Exchange Act of
1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or
15(d) thereof, for the twelve months preceding the date hereof (or such shorter
period as the Company was required by law to file such reports) on a timely
basis. As of their respective dates, all materials filed by the Company with the
SEC, whether or not so required to have been filed (collectively, the “Public
Documents”), complied in all material respects with the requirements of the 1933
Act and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the Public Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Public Documents comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with U.S. GAAP
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
To the knowledge of Company and its officers, no other information provided by
or on behalf of Company to the Buyer which is not included in the Public
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.

 

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6.7 Absence of Certain Changes. Since the date the last of the Public Documents
was filed with SEC Markets, none of the following have occurred:

 

(a) There has been no event or circumstance of any nature whatsoever that has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect; or

 

(b) Any transaction, event, action, development, payment, or any other matter of
any nature whatsoever entered into by the Company other than in the Company’s
Ordinary Course of Business.

 

6.8 Absence of Litigation or Adverse Matters. No condition, circumstance, event,
agreement, document, instrument, restriction, litigation or Proceeding (or
threatened litigation or Proceeding or basis therefor) exists which: (i) could
adversely affect the ability of the Company to perform its Obligations under the
Transaction Documents; (ii) would constitute a default under any of the
Transaction Documents; (iii) would constitute such a default with the giving of
notice or lapse of time or both; or (iv) would constitute or give rise to a
Material Adverse Effect. In addition: (v) there is no Proceeding before or by
any Governmental Authority or any other Person, pending, or the best of
Company’s knowledge, threatened or contemplated by, against or affecting the
Company, its business or Assets; (vi) there is no outstanding Judgments against
or affecting the Company, its business or Assets; (vii) the Company is not in
breach or violation of any Contract; and (viii) the Company has not received any
material complaint from any customer, supplier, vendor or employee.

 

6.9 Liabilities and Indebtedness of the Company. The Company does not have any
Obligations of any nature whatsoever, except: (i) as disclosed in the Financial
Statements; or (iii) Obligations incurred in the Ordinary Course of Business
since the date of the most recent Financial Statements which do not or would
not, individually or in the aggregate, exceed One Hundred Thousand United States
Dollars (US$100,000) or otherwise have a Material Adverse Effect.

 

6.10 Title to Assets. The Company has good and marketable title to, or a valid
leasehold interest in, all of its Assets which are material to the business and
operations of the Company as presently conducted. Except as would not have a
Material Adverse Effect, the Company’s Assets are in good operating condition
and repair, ordinary wear and tear excepted, and are free of any latent or
patent defects which might impair their usefulness, and are suitable for the
purposes for which they are currently used and for the purposes for which they
are proposed to be used.

 

6.11 Compliance with Laws. To the knowledge of the Company and its officers, the
Company is and at all times has been in full compliance with all Laws. The
Company has not received any notice that it is in violation of, has violated, or
is under investigation with respect to, or has been threatened to be charged
with, any violation of any Law.

 

6.12 Intellectual Property. The Company owns or possesses adequate and legally
enforceable rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and all other intellectual property rights necessary to conduct its
business as now conducted. The Company does not have any knowledge of any
infringement by the Company of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other intellectual property rights of
others, and, to the knowledge of the Company, there is no Claim being made or
brought against, or to the Company’s knowledge, being threatened against, the
Company regarding trademark, trade name, patents, patent rights, invention,
copyright, license, service names, service marks, service mark registrations,
trade secret or other intellectual property infringement; and the Company is
unaware of any facts or circumstances which might give rise to any of the
foregoing.

 

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6.13 Labor and Employment Matters. The Company is not involved in any labor
dispute or, to the knowledge of the Company, is any such dispute threatened. To
the knowledge of the Company and its officers, none of the Company’s employees
is a member of a union and the Company believes that its relations with its
employees are good. To the knowledge of the Company and its officers, the
Company has complied in all material respects with all Laws relating to
employment matters, civil rights and equal employment opportunities.

 

6.14 Employee Benefit Plans. Except as disclosed to the Buyer in writing prior
to the date hereof, the Company does not have and has not ever maintained, and
has no Obligations with respect to any employee benefit plans or arrangements,
including employee pension benefit plans, as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare
benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents of the Company participate (collectively, the
“Employee Benefit Plans”). To the Company’s knowledge, all Employee Benefit
Plans meet the minimum funding standards of Section 302 of ERISA, where
applicable, and each such Employee Benefit Plan that is intended to be qualified
within the meaning of Section 401 of the Internal Revenue Code of 1986 is
qualified. No withdrawal liability has been incurred under any such Employee
Benefit Plans and no “Reportable Event” or “Prohibited Transaction” (as such
terms are defined in ERISA), has occurred with respect to any such Employee
Benefit Plans, unless approved by the appropriate Governmental Authority. To the
Company’s knowledge, the Company has promptly paid and discharged all
Obligations arising under ERISA of a character which if unpaid or unperformed
might result in the imposition of an Encumbrance against any of its Assets or
otherwise have a Material Adverse Effect.

 

6.15 Tax Matters. The has made and timely filed all Tax Returns required by any
jurisdiction to which it is subject, and each such Tax Return has been prepared
in compliance with all applicable Laws, and all such Tax Returns are true and
accurate in all respects. Except and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported Taxes, the Company has timely paid all Taxes shown or determined
to be due on such Tax Returns, except those being contested in good faith, and
the Company has set aside on its books provision reasonably adequate for the
payment of all Taxes for periods subsequent to the periods to which such Tax
Returns 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 withheld and paid all Taxes
to the appropriate Governmental Authority required to have been withheld and
paid in connection with amounts paid or owing to any Person. There is no
Proceeding or Claim for refund now in progress, pending or threatened against or
with respect to the Company regarding Taxes.

 

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6.16 Insurance. The Company is covered by valid, outstanding and enforceable
policies of insurance which were issued to it by reputable insurers of
recognized financial responsibility, covering its properties, Assets and
businesses against losses and risks normally insured against by other
corporations or entities in the same or similar lines of businesses as the
Company is engaged and in coverage amounts which are prudent and typically and
reasonably carried by such other corporations or entities (the “Insurance
Policies”). Such Insurance Policies are in full force and effect, and all
premiums due thereon have been paid. None of the Insurance Policies will lapse
or terminate as a result of the transactions contemplated by this Agreement. The
Company has complied with the provisions of such Insurance Policies. 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 Policies as and when such Insurance Policies expire or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations of
the Company.

 

6.17 Permits. The Company possesses all Permits necessary to conduct its
business, and the Company has not received any notice of, or is otherwise
involved in any Proceedings relating to, the revocation or modification of any
such Permits. All such Permits are valid and in full force and effect and the
Company is in full compliance with the respective requirements of all such
Permits.

 

6.18 Environmental Laws. Except as are used in such amounts as are customary in
the Company’s Ordinary Course of Business and in compliance with all applicable
Environmental Laws, the Company represents and warrants to Buyer that: (i) the
Company has not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off any of the
premises of the Company (whether or not owned by the Company) in any manner
which at any time violates any Environmental Law or any Permit, certificate,
approval or similar authorization thereunder; (ii) the operations of the Company
comply in all material respects with all Environmental Laws and all Permits
certificates, approvals and similar authorizations thereunder; (iii) there has
been no investigation, Proceeding, complaint, order, directive, Claim, citation
or notice by any Governmental Authority or any other Person, nor is any pending
or, to the Company’s knowledge, threatened; and (iv) the Company does not have
any liability, contingent or otherwise, in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Material.

 

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6.19 Illegal Payments. Neither the Company, nor any director, officer, agent,
employee or other Person acting on behalf of the Company has, in the course of
his actions for, or on behalf of, the Company: (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.

 

6.20 Related Party Transactions. Except for arm’s length transactions pursuant
to which the Company makes payments in the Ordinary Course of Business upon
terms no less favorable than the Company could obtain from third parties, none
of the officers, directors or employees of the Company, nor any stockholders who
own, legally or beneficially, five percent (5%) or more of the issued and
outstanding shares of any class of the Company’s capital stock (each a “Material
Shareholder”), is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any Contract
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 Material Shareholder or, to the best
knowledge of the Company, any other Person in which any officer, director, or
any such employee or Material Shareholder has a substantial or material interest
in or of which any officer, director or employee of the Company or Material
Shareholder is an officer, director, trustee or partner. There are no Claims or
disputes of any nature or kind between the Company and any officer, director or
employee of the Company or any Material Shareholder, or between any of them,
relating to the Company and its business.

 

6.21 Internal Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to Assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for Assets is compared with the existing Assets at reasonable
intervals and appropriate action is taken with respect to any differences.

 

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

 

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6.23 Brokerage Fees. Except William Smith and Company, there is no Person acting
on behalf of the Company who is entitled to or has any claim for any brokerage
or finder’s fee or commission in connection with the execution of this Agreement
or the consummation of the transactions contemplated hereby.

 

6.24 No General Solicitation. Neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or issuance of the Securities.

 

6.25 Private Placement. No registration under the Securities Act or the laws,
rules or regulation of any other governmental authority is required for the
issuance of the Securities. The Company is not disqualified from relying on Rule
506 Securities Act pursuant to Rule 506(d) or any other provision thereof.

 

6.26 No Integrated Offering. None of the Company, any of its affiliates, or any
Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of any of the Securities under the
1933 Act or cause this offering of the Securities to be integrated with prior
offerings of the Company’s securities for purposes of the 1933 Act. None of the
Company, its affiliates and any Person acting on their behalf will take any
action or steps referred to in the preceding sentence that would require
registration of any of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.

 

6.27 Full Disclosure. All the representations and warranties made by Company
herein or in the Schedules hereto, and all of the financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials submitted to the Buyer in connection with or in furtherance of this
Agreement or pertaining to the transaction contemplated herein, whether made or
given by Company, its agents or representatives, are complete and accurate to
the best of the knowledge of the Company, its officers and directors, and do not
omit any information required to make the statements and information provided,
in light of the transaction contemplated herein and in light of the
circumstances under which they were made, not misleading, accurate and
meaningful.

 

ARTICLE VII

COVENANTS

 

7.1 Covenants.

 

(a) Corporate Existence. The Company shall at all times preserve and maintain
its: (i) existence and good standing in the jurisdiction of its organization;
and (ii) its qualification to do business and good standing in each jurisdiction
where the nature of its business makes such qualification necessary, and shall
at all times continue as a going concern in the business which the Company is
presently conducting.

 

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(b) Tax Liabilities. The Company shall at all times pay and discharge all Taxes
upon, and all Claims (including claims for labor, materials and supplies)
against the Company or any of its properties or Assets, before the same shall
become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP are being maintained.

 

(c) Notice of Proceedings. The Company shall, promptly, but not more than five
(5) days after knowledge thereof shall have come to the attention of any officer
of the Company, give written notice to the Buyer of all threatened or pending
material Proceedings before any Governmental Authority or otherwise affecting
the Company or any of its Assets.

 

(d) Material Adverse Effect. The Company shall, promptly, but not more than five
(5) days after knowledge thereof shall have come to the attention of any officer
of the Company, give written notice to the Buyer of any event, circumstance,
fact or other matter that could in any way have or be reasonably expected to
have a Material Adverse Effect.

 

(e) Notice of Default. The Company shall, promptly, but not more than five (5)
days after the commencement thereof, give notice to the Buyer in writing of the
occurrence of any “Event of Default” (as such term is defined in any of the
Transaction Documents) or of any event which, with the lapse of time, the giving
of notice or both, would constitute an Event of Default hereunder or under any
other Transaction Documents.

 

(f) Maintain Property. The Company shall at all times maintain, preserve and
keep all of its Assets in good repair, working order and condition, normal wear
and tear excepted, and shall from time to time, as the Company deems appropriate
in its reasonable judgment, make all needful and proper repairs, renewals,
replacements, and additions thereto so that at all times the efficiency thereof
shall be fully preserved and maintained.

 

(g) Maintain Insurance. The Company shall at all times insure and keep insured
with insurance companies acceptable to Buyer, all insurable property owned by
the Company which is of a character usually insured by companies similarly
situated and operating like properties, against loss or damage from
environmental, fire and such other hazards or risks as are customarily insured
against by companies similarly situated and operating like properties; and shall
similarly insure employers’, public and professional liability risks.

 

(h) ERISA Liabilities; Employee Plans. The Company shall: (i) keep in full force
and effect any and all Employee Plans which are presently in existence or may,
from time to time, come into existence under ERISA, and not withdraw from any
such Employee Plans, unless such withdrawal can be effected or such Employee
Plans can be terminated without liability to the Company; (ii) make
contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply with the standards of ERISA, including the minimum
funding standards of ERISA; (iii) comply with all material requirements of ERISA
which relate to such Employee Plans; (iv) notify Buyer immediately upon receipt
by the Company of any notice concerning the imposition of any withdrawal
liability or of the institution of any Proceeding or other action which may
result in the termination of any such Employee Plans or the appointment of a
trustee to administer such Employee Plans; (v) promptly advise Buyer of the
occurrence of any “Reportable Event” or “Prohibited Transaction” (as such terms
are defined in ERISA), with respect to any such Employee Plans; and (vi) amend
any Employee Plan that is intended to be qualified within the meaning of Section
401 of the Internal Revenue Code of 1986 to the extent necessary to keep the
Employee Plan qualified, and to cause the Employee Plan to be administered and
operated in a manner that does not cause the Employee Plan to lose its qualified
status.

 

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(i) Reporting Status; Listing. So long as Buyer owns, legally or beneficially,
any of the Securities, the Company shall: (i) file in a timely manner all
reports required to be filed under the Securities Act, the Exchange Act or any
securities Laws and regulations thereof applicable to the Company of any state
of the United States, or by the rules and regulations of the Principal Trading
Market, and, to provide a copy thereof to the Buyer promptly after such filing;
(ii) if required by the rules and regulations of the Principal Trading Market,
promptly secure the listing of any shares of Common Stock issuable to Buyer
under any of the Transaction Documents upon the Principal Trading Market
(subject to official notice of issuance) and, take all reasonable action under
its control to maintain the continued listing, quotation and trading of its
Common Stock (including, without limitation, any shares of Common Stock issuable
to Buyer under any of the Transaction Documents) on the Principal Trading
Market, and the Company shall comply in all respects with the Company’s
reporting, filing and other Obligations under the bylaws or rules of the
Principal Trading Market, the Financial Industry Regulatory Authority, Inc. and
such other Governmental Authorities, as applicable. The Company shall promptly
provide to Buyer copies of any notices it receives from the SEC or any Principal
Trading Market, to the extent any such notices could in any way have or be
reasonably expected to have a Material Adverse Effect.

 

(j) Non-Public Information. The Company covenants and agrees that neither it nor
any other Person acting on its behalf has or will provide Buyer with any
information that the Company believes constitutes material non-public
information other than the transactions contemplated by the Transaction
Documents. The Company understands and confirms that Buyer shall be relying on
the foregoing representations in effecting transactions in securities of the
Company.

 

(k) Participation in the Qualified Offering. The Buyer shall be permitted to
participate in the Qualified Offering and, in its sole and absolute discretion,
purchase additional shares of Series B Preferred in an amount of up to Two
Million and No/100 United States Dollars (US$2,000,000), pursuant to the terms
and conditions set forth in the documents governing the Qualified Offering. The
Company shall provide the Buyer no less than fourteen (14) days’ notice of the
termination of the Qualified Offering. In addition, the Buyer shall be granted
the same registration rights as granted to any other purchaser of Series B
Preferred in connection with the Qualified Offering.

 

7.2 Fees and Expenses.

 

(a) Transaction Fees. The Company agrees to pay to Buyer an origination fee
equal to two percent (2%) of the amount of the Debenture purchased by Buyer,
which fee shall be due and payable on the Effective Date and withheld from the
gross purchase price paid by Buyer for the Debenture.

 

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(b) Document Review and Legal Fees. The Company agrees to pay to the Buyer or
its counsel a document review and legal fee equal to eighteen thousand, seven
hundred fifty United States Dollars (US$18,750), which shall be due and payable
in full on the Effective Date, or any remaining portion thereof shall be due and
payable on the Effective Date if a portion of such fee was paid upon the
execution of any term sheet related to this Agreement. The Company also agrees
to be responsible for the prompt payment of all legal fees and expenses of the
Company and its own counsel and other professionals incurred by the Company in
connection with the negotiation and execution of this Agreement and the
Transaction Documents.

 

7.3 Issuance of Common Stock. The Company agrees to issue to the Buyer two
hundred thousand (200,000) shares of the Company’s common stock, par value
$0.00001 per share, as a commitment fee in consideration for purchasing the
Debenture. In the event of Qualified Offering at a price of less than $2.00 per
Series B Preferred share, the Buyer shall be issued additional shares of the
Company’s common stock at the time of the Qualified Offering such that the
aggregate value of common shares issued to the Buyer pursuant to Section 7.3
shall be not less than Four Hundred Thousand United States Dollars (US$400,000).

 

ARTICLE VIII

INDEMNIFICATION

 

(a) The Company will indemnify and hold Buyer and its directors, officers,
stockholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Buyer (within the meaning of Section 15 of the 1933 Act and
Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, a
“Buyer Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Buyer Party may suffer or incur as a result
of (i) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or any Transaction Document or
(ii) any action instituted against a Buyer Party in any capacity, or any of them
or their respective affiliates, by any stockholder of the Company who is not an
affiliate of such Buyer Party, with respect to any of the transactions
contemplated by this Agreement. The Company will not be liable to any Buyer
Party under this Agreement to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Buyer Party’s breach of any of
the representations, warranties, covenants or agreements made by such Buyer
Party in this Agreement or any Transaction Document; provided that such a claim
for indemnification relating to any breach of any of the representations or
warranties made by the Company in this Agreement is made within 18 months from
the Closing.

 

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(b) Conduct of Indemnification Proceedings. Promptly after receipt by any Person
(the “Indemnified Person”) of notice of any demand, claim or circumstances which
would or might give rise to a claim or the commencement of any action,
proceeding or investigation in respect of which indemnity may be sought pursuant
to Article VIII, such Indemnified Person shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Person, and
shall assume the payment of all fees and expenses; provided, however, that the
failure of any Indemnified Person so to notify the Company shall not relieve the
Company of its obligations hereunder except to the extent that the Company is
actually and materially and adversely prejudiced by such failure to notify. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless: (i) the Company and the Indemnified Person
shall have mutually agreed to the retention of such counsel; (ii) the Company
shall have failed promptly to assume the defense of such proceeding and to
employ counsel reasonably satisfactory to such Indemnified Person in such
proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. Without the prior written consent of the Indemnified
Person, which consent shall not be unreasonably withheld, delayed or
conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.

 

ARTICLE IX

CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL

 

The obligation of the Company hereunder to issue and sell the Securities to the
Buyer is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, 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:

 

9.1 Buyer shall have executed the Transaction Documents and delivered them to
the Company.

 

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

 

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9.3 The Company shall have received such certificates, confirmations,
resolutions, acknowledgements or other documentation necessary or advisable from
all applicable Governmental Authorities, including, but not limited to, those
located in the State of Nevada, as the Company may require in order to evidence
such Governmental Authorities’ approval of this Agreement, the Transaction
Documents and the purchase of the Debenture contemplated hereby.

 

ARTICLE X

CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATIONS TO PURCHASE

 

The obligation of the Buyer hereunder to purchase the Debenture is subject to
the satisfaction, at or before the Closing Date, of each of the following
conditions (in addition to any other conditions precedent elsewhere in this
Agreement), provided that these conditions are for the Buyer’s sole benefit and
may be waived by the Buyer at any time in its sole discretion:

 

10.1 The Company, and/or the Chief Executive Officer (as applicable) shall have
executed and delivered the Transaction Documents to the Buyer.

 

10.2 The representations and warranties of the Company shall be true and correct
in all material respects (except to the extent that any of such representations
and warranties are already qualified as to materiality in Article VI above, in
which case, such representations and warranties shall be true and correct in all
respects without further qualification) as of the Closing Date (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.

 

10.3 The Company shall have executed and delivered to Buyer a closing
certificate, certified as true, complete and correct by an officer of the
Company, in substance and form required by Buyer, which closing certificate
shall include and attach as exhibits: (i) a true copy of a certificate of good
standing evidencing the formation and good standing of the Company from the
secretary of state (or comparable office) from the jurisdiction in which the
Company is formed; (ii) the Company’s Organizational Documents; and (iii) copies
of the resolutions of the board of directors of the Company as adopted by the
Company’s or board of directors, in a form acceptable to Buyer, approving and
authorizing the execution, delivery and performance of the Transaction Documents
to which it is party and the transactions contemplated thereby, in a form
acceptable to the Buyer.

 

10.4 No event shall have occurred which could reasonably be expected to have a
Material Adverse Effect.

 

10.5 The Buyer shall have received copies of UCC search reports, issued by the
Secretary of State of the state of incorporation of the Company, dated such a
date as is reasonably acceptable to Buyer, listing all effective financing
statements which name the Company, under its present name and any previous
names, as debtors, together with copies of such financing statements.

 

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10.6 The Company shall have executed such other agreements, certificates,
confirmations or resolutions as the Buyer may require to consummate the
transactions contemplated by this Agreement and the Transaction Documents,
including a closing statement and joint disbursement instructions as may be
required by Buyer.

 

ARTICLE XI

MISCELLANEOUS

 

10.1 Notices. All notices of request, demand and other communications hereunder
shall be addressed to the parties as follows:

 

If to the Company: MamaMancini’s Holdings, Inc.   25 Branca Road   East
Rutherford, NJ 07073   Attention: Carl Wolf   E-Mail: carl@mamamancinis.com    
With a copy to: Lucosky Brookman LLP (which shall not constitute notice) 101
Wood Avenue South, 5th Floor   Woodbridge, NJ 08830   Attn: Joseph M. Lucosky,
Esq.   E-Mail: jlucosky@lucbro.com     If to the Buyer: Manatuck Hill Partners,
LLC   1465 Post Road   East Westport, CT   06880   (203) 418–4400   Attn: Tom
Scalia   E-Mail: tom@manatuckhill.com     With a copy to: Seward & Kissel LLP
(which shall not constitute notice) One Battery Park Plaza   New York, NY 10004
  Attn: Edward Horton   E-Mail: horton@sewkis.com

 

unless the address is changed by the party by like notice given to the other
parties. Notice shall be in writing and shall be deemed 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 or sent by email, then upon hand delivery or receipt thereof to the
address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice
hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following
business 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 from the receiving party) that the notice has been received
by the other party.

 

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10.2 Entire Agreement. This Agreement and the other Transaction Documents: (i)
are valid, binding and enforceable against the Company and Buyer in accordance
with its provisions and no conditions exist as to their legal effectiveness;
(ii) constitute the entire agreement between the parties; and (iii) are the
final expression of the intentions of the Company and Buyer. No promises, either
expressed or implied, exist between the Company and Buyer, unless contained
herein or in the Transaction Documents. This Agreement and the Transaction
Documents supersede all negotiations, representations, warranties, commitments,
offers, contracts (of any kind or nature, whether oral or written) prior to or
contemporaneous with the execution hereof.

 

10.3 Amendments; Waivers. No amendment, modification, termination, discharge or
waiver of any provision of this Agreement or of the Transaction Documents, or
consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by Buyer, and then such
waiver or consent shall be effective only for the specific purpose for which
given.

 

10.4 WAIVER OF JURY TRIAL. BUYER, THE COMPANY AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR ANY OF THE OBLIGATIONS
HEREUNDER, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING
IN WHICH BUYER AND THE COMPANY AND/OR THE GUARNATORS ARE ADVERSE PARTIES. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BUYER PURCHASING THE DEBENTURES.

 

10.5 Assignability. Buyer may at any time assign Buyer’s rights in this
Agreement, the Debentures, any Transaction Document, or any part thereof. In
addition, Buyer may at any time sell one or more participations in the
Debentures. The Company may not sell or assign this Agreement, any Transaction
Document or any other agreement with Buyer, or any portion thereof, either
voluntarily or by operation of law, nor delegate any of its duties of
obligations hereunder or thereunder, without the prior written consent of Buyer,
which consent may be withheld or conditioned in Buyer’s sole and absolute
discretion. This Agreement shall be binding upon Buyer and the Company and their
respective legal representatives, successors and permitted assigns. All
references herein to a Company shall be deemed to include any successors,
whether immediate or remote. In the case of a joint venture or partnership, the
term “Company shall be deemed to include all joint venturers or partners
thereof, who shall be jointly and severally liable hereunder.

 

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10.6 Publicity. Buyer shall have the right to approve, before issuance, any
press release or any other public statement with respect to the transactions
contemplated hereby made by the Company; provided, however, that the Company
shall be entitled, without the prior approval of Buyer, to issue any press
release or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations. Notwithstanding the
foregoing, the Company shall use its best efforts to consult Buyer in connection
with any such press release or other public disclosure prior to its release and
Buyer shall be provided with a copy thereof upon release thereof. Buyer shall
have the right to make any press release with respect to the transactions
contemplated hereby without Company’s approval. In addition, with respect to any
press release to be made by Buyer, the Company hereby authorizes and grants
blanket permission to Buyer to include the Company’s stock symbol, if any, in
any press releases. The Company shall, promptly upon request, execute any
additional documents of authority or permission as may be requested by Buyer in
connection with any such press releases.

 

10.7 Binding Effect. This Agreement shall become effective upon execution by the
Company and Buyer.

 

10.8 Governing Law. This Agreement and all other Transaction Documents shall be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of such State, without giving
effect to the choice of law provisions of such State.

 

10.9 Enforceability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by, unenforceable or
invalid under any jurisdiction, such provision shall as to such jurisdiction, be
severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

10.10 Survival of Company’s Representations. All covenants, agreements,
representations and warranties made by the Company herein shall, notwithstanding
any investigation by Buyer, be deemed material and relied upon by Buyer and
shall survive the making and execution of this Agreement and the Transaction
Documents and the sale and purchase of the Debenture, and shall be deemed to be
continuing representations and warranties until such time as the Company have
fulfilled all of its Obligations to Buyer hereunder and under all other
Transaction Documents, and Buyer has been indefeasibly paid in full.

 

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10.11 Time of Essence. Time is of the essence in making payments of all amounts
due Buyer under this Agreement and the other Transaction Documents and in the
performance and observance by the Company of each covenant, agreement, provision
and term of this Agreement and the other Transaction Documents. The parties
agree that in the event that any date on which performance is to occur falls on
a day other than a Business Day, then the time for such performance shall be
extended until the next Business Day thereafter occurring.

 

10.12 Interpretation. If any provision in this Agreement requires judicial or
similar interpretation, the judicial or other such body interpreting or
construing such provision shall not apply the assumption that the terms hereof
shall be more strictly construed against one party because of the rule that an
instrument must be construed more strictly against the party which itself or
through its agents prepared the same. The parties hereby agree that all parties
and their agents have participated in the preparation hereof equally.

 

10.13 Compliance with Federal Law. The Company shall: (i) ensure that no Person
who owns a controlling interest in or otherwise controls the Company is or shall
be listed on the Specially Designated Nationals and Blocked Person List or other
similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the
Department of the Treasury, included in any Executive Orders or any other
similar lists from any Governmental Authority, foreign or national; (ii) not use
or permit the use of the proceeds of the Debenture to violate any of the foreign
asset control regulations of OFAC or any enabling statute or Executive Order
relating thereto, or any other similar national or foreign governmental
regulations; and (iii) comply with all applicable Lender Secrecy Act laws and
regulations, as amended. As required by federal law and Buyer’s policies and
practices, Buyer may need to obtain, verify and record certain customer
identification information and documentation in connection with opening or
maintaining accounts or establishing or continuing to provide services.

 

10.14. Termination. Upon payment in full of the Debenture purchased hereunder,
together with all other charges, fees and costs due and payable under this
Agreement or under any of the Transaction Documents, the Company shall have the
right to terminate this Agreement upon written notice to the Buyer.

 

10.15. Gender and Use of Singular and Plural. All pronouns shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the party or parties or their personal representatives, successors and assigns
may require.

 

10.16. Execution. 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.

 

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10.17. Headings. The article and section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of the Agreement.

 

10.18. Further Assurances. The Company will execute and deliver such further
instruments and do such further acts and things as may be reasonably required by
Buyer to carry out the intent and purposes of this Agreement.

 

10.19. No 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.

 

[signature pages follow]

 

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

 

COMPANY:

 

MAMAMANCINI’S HOLDINGS, INC.

 

By:     Name: Carl Wolf   Title: Chief Executive Officer         BUYER:        
MANATUCK HILL PARTNERS, LLC         By:     Name: Thomas Scalia   Title: Chief
Financial Officer of the Managing Member  

 

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EXHIBIT A

 

FORM OF DEBENTURE

 

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EXHIBIT B

 

REGISTERED HOLDER

 

Manatuck Hill Scout Fund, LP

 

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