EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

 

THIS AGREEMENT dated as of the 27th day of June 2008 (the “Agreement”) between
TANGIERS INVESTORS, LP, a limited partnership (the “Investor”), and CORD BLOOD
AMERICA, INC., a corporation organized and existing under the laws of the State
of Florida (the “Company”).

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, from time to
time as provided herein, and the Investor shall purchase from the Company up to
Four Million Dollars ($4,000,000) of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”); and

 

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

  

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I.

Certain Definitions

 

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

 

Section 1.2. “Advance Date” shall mean the first (1st) Trading Day after
expiration of the applicable Pricing Period for each Advance.

 

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

 

Section 1.4. “Advance Notice Date” shall mean each date the Company delivers (in
accordance with Section 2.2(b) of this Agreement) to the Investor an Advance
Notice requiring the Investor to advance funds to the Company, subject to the
terms of this Agreement. No Advance Notice Date shall be less than ten (10)
Trading Days after the prior Advance Notice Date.

 

Section 1.5. “Bid Price” shall mean, on any date, the closing bid price (as
reported by Bloomberg L.P.) of the Common Stock on the Principal Market or if
the Common Stock is not traded on a Principal Market, the highest reported bid
price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc.

 

Section 1.6. “Closing” shall mean one of the closings of a purchase and sale of
Common Stock pursuant to Section 2.3.

 

Section 1.7. “Commitment Amount” shall mean the aggregate amount of up to Four
Million Dollars ($4,000,000) which the Investor has agreed to provide to the
Company in order to purchase the Company’s Common Stock pursuant to the terms
and conditions of this Agreement.

 

Section 1.8. “Commitment Period” shall mean the period commencing on the
Effective Date, and expiring on the earliest to occur of (x) the date on which
the Investor shall have made payment of

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Advances pursuant to this Agreement in the aggregate amount of the Commitment
Amount, (y) the date this Agreement is terminated pursuant to Section 10.2 or
(z) the date occurring twenty-four (24) months after the Effective Date or
thirty six (36) months after the Effective Date if twenty-four (24) months after
the Effective Date the Company files either an amendment to the then effective
registration statement or a new registration statement is declared effective.

 

Section 1.9. “Common Stock” shall mean the Company’s common stock, par value
$0.0001 per share.

 

Section 1.10. “Condition Satisfaction Date” shall have the meaning set forth in
Section 7.2.

 

Section 1.11. “Damages” shall mean any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorney’s fees and
disbursements and costs and expenses of expert witnesses and investigation).

 

Section 1.12. “Effective Date” shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).

 

Section 1.13. “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

Section 1.14. “Material Adverse Effect” shall mean any condition, circumstance,
or situation that would prohibit or otherwise materially interfere with the
ability of the Company to enter into and perform any of its obligations under
this Agreement or the Registration Rights Agreement in any material respect.

 

Section 1.15. “Market Price” shall mean the bid price daily volume weighted
average price  of the Common Stock during the Pricing Period.

 

Section 1.16. “Maximum Advance Amount” shall be Two Hundred Fifty Thousand
Dollars ($250,000) per Advance Notice.

Section 1.17. “Minimum Advance Amount” shall be Ten Thousand Dollars ($10,000)
per Advance Notice.

 

Section 1.18. “NASD” shall mean the National Association of Securities Dealers,
Inc.

 

Section 1.19. “Person” shall mean an individual, a corporation, a partnership,
an association, a trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

 

Section 1.20. “Pricing Period” shall mean the five (5) consecutive Trading Days
after the Advance Notice Date subject to any reduction pursuant to Section
2.2(c).

 

Section 1.21. “Principal Market” shall mean the Nasdaq Global Select Market, the
Nasdaq Global Market, the Nasdaq Capital Market, the American Stock Exchange,
the OTC Bulletin Board or the New York Stock Exchange, whichever is at the time
the principal trading exchange or market for the Common Stock.

 

Section 1.22. “Purchase Price” shall be set at ninety percent (90%) of the
Market Price during the Pricing Period.

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Section 1.23. “Registrable Securities” shall mean the shares of Common Stock to
be issued hereunder (i) in respect of which the Registration Statement has not
been declared effective by the SEC, (ii) which have not been sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act (“Rule 144”) or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

 

Section 1.24. “Registration Rights Agreement” shall mean the Registration Rights
Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.

 

Section 1.25. “Registration Statement” shall mean a registration statement on
Form S-1 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement and the Registration Rights Agreement, and in accordance with the
intended method of distribution of such securities), for the registration of the
resale by the Investor of the Registrable Securities under the Securities Act.

 

Section 1.26. “Regulation D” shall have the meaning set forth in the recitals of
this Agreement.

 

Section 1.27. “SEC” shall mean the United States Securities and Exchange
Commission.

 

Section 1.28. “Securities Act” shall have the meaning set forth in the recitals
of this Agreement.

 

Section 1.29. “SEC Documents” shall mean Annual Reports on Form 10-KSB, 10-K,
Quarterly Reports on Form 10-QSB, 10-Q, Current Reports on Form 8-K and Proxy
Statements of the Company as supplemented to the date hereof, filed by the
Company for a period of at least twelve (12) months immediately preceding the
date hereof or the Advance Date, as the case may be, until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.

 

Section 1.30. “Trading Day” shall mean any day during which the New York Stock
Exchange shall be open for business.

 

Section 1.31. “VWAP” shall mean the volume weighted average price of the
Company’s Common Stock as quoted by Bloomberg, LP.

 

ARTICLE II.

Advances

 

Section 2.1. Advances.

 

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Subject to the terms and conditions of this Agreement (including, without
limitation, the provisions of Article VII hereof), the Company, at its sole and
exclusive option, may issue and sell to the Investor, and the Investor shall
purchase from the Company, shares of the Company’s Common Stock by the delivery,
in the Company’s sole discretion, of Advance Notices. The number of shares of
Common Stock that the Investor shall purchase pursuant to each Advance shall be
determined by dividing the amount of the Advance by the Purchase Price. No
fractional shares shall be issued. Fractional shares shall be rounded to the
next higher whole number of shares. The aggregate maximum amount of all Advances
that the Investor shall be obligated to make under this Agreement shall not
exceed the Commitment Amount.

 

Section 2.2. Mechanics.

 

(a) Advance Notice. At any time during the Commitment Period, the Company may
require the Investor to purchase shares of Common Stock by delivering an Advance
Notice to the Investor, subject to the conditions set forth in Section 7.2;
provided, however, the amount for each Advance as designated by the Company in
the applicable Advance Notice shall not be less than the Minimum Advance Amount,
nor more than the Maximum Advance Amount and the aggregate amount of the
Advances pursuant to this Agreement shall not exceed the Commitment Amount. The
Company acknowledges that the Investor may sell shares of the Company’s Common
Stock corresponding with a particular Advance Notice after the Advance Notice is
received by the Investor. There shall be a minimum of ten (10) Trading Days
between each Advance Notice Date.

 

(b) Date of Delivery of Advance Notice. An Advance Notice shall be deemed
delivered on (i) the Trading Day it is received by facsimile or otherwise by the
Investor if such notice is received prior to 5:00 pm Eastern Time, or (ii) the
immediately succeeding Trading Day if it is received by facsimile or otherwise
after 5:00 pm Eastern Time on a Trading Day or at any time on a day which is not
a Trading Day. No Advance Notice may be deemed delivered on a day that is not a
Trading Day.

 

(c)  Purchase Price Floor.  The Company and the Investor shall not effect any
sales under this Agreement on any Advance Date where the Market Price for any
purchases of Common Stock would be less than the Floor Price.   “Floor Price”
means $0.01, which shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction.

Section 2.3. Closings. On each Advance Date (i) the Company shall deliver to the
Investor such number of shares of the Common Stock registered in the name of the
Investor as shall equal (x) the amount of the Advance specified in such Advance
Notice pursuant to Section 2.1 herein, divided by (y) the Purchase Price and
(ii) upon receipt of such shares, the Investor shall deliver to the Company the
amount of the Advance specified in the Advance Notice by wire transfer of
immediately available funds. In addition, on or prior to the Advance Date, each
of the Company and the Investor shall deliver to the other all documents,
instruments and writings required to be delivered by either of them pursuant to
this Agreement in order to implement and effect the transactions contemplated
herein. To the extent the Company has not paid the fees, expenses, and
disbursements of the Investor in accordance with Section 12.4, the amount of
such fees, expenses, and disbursements may be deducted by the Investor (and
shall be paid to the relevant party) directly out of the proceeds of the Advance
with no reduction in the amount of shares of the Company’s Common Stock to be
delivered on such Advance Date.

 

 

(a)

Company’s Obligations Upon Closing.

 

On each Advance Date:  

(i) The Company shall deliver to the Investor the shares of Common Stock
applicable to the Advance in accordance with Section 2.3. The certificates
evidencing such shares shall be

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free of restrictive legends, provided such shares are registered pursuant to an
effective registration statement.

(ii) the Company’s Registration Statement with respect to the resale of the
shares of Common Stock delivered in connection with the Advance shall have been
declared effective by the SEC;

 

(iii) the Company shall have obtained all material permits and qualifications
required by any applicable state for the offer and sale of the Registrable
Securities, or shall have the availability of exemptions therefrom. The sale and
issuance of the Registrable Securities shall be legally permitted by all laws
and regulations to which the Company is subject;

 

(iv) the Company shall have filed with the SEC in a timely manner all reports,
notices and other documents required of a “reporting company” under the Exchange
Act and applicable Commission regulations;

 

(v) the fees as set forth in Section 12.4 below shall have been paid or can be
withheld as provided in Section 2.3; and

 

(vi) The Company’s transfer agent shall be DWAC eligible.

 

(b) Investor’s Obligations Upon Closing Upon receipt of the shares referenced in
Section 2.3(a)(i) above and provided the Company is in compliance with its
obligations in Section 2.3, the Investor shall deliver to the Company the amount
of the Advance specified in the Advance Notice by wire transfer of immediately
available funds.

 

Section 2.4. Lock Up Period. On the date hereof, the Company shall obtain from
each officer and director a lock-up agreement, as defined below, in the form
annexed hereto as Exhibit “B”. The lock up period under such lock-up agreements
shall be for a period of 12 months from the date hereof.

 

Section 2.5. Hardship.  In the event the Investor sells shares of the Company’s
Common Stock after receipt of an Advance Notice and the Company fails to perform
its obligations as mandated in Section 2.3, and specifically the Company fails
to deliver to the Investor on the Advance Date the shares of Common Stock
corresponding to the applicable Advance pursuant to Section 2.3(a)(i), the
Company acknowledges that the Investor shall suffer financial hardship and,
provided that the Investor has performed its obligations pursuant to Section
2.3,therefore shall be liable for any and all losses, commissions, fees, or
financial hardship caused to the Investor.

 

ARTICLE III.

Representations and Warranties of Investor

 

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

 

Section 3.1. Organization and Authorization. The Investor is duly incorporated
or organized and validly existing in the jurisdiction of its incorporation or
organization and has all requisite power and authority to purchase and hold the
securities issuable hereunder. The decision to invest and the execution and
delivery of this Agreement by such Investor, the performance by such Investor of
its obligations hereunder and the consummation by such Investor of the
transactions contemplated hereby have been duly authorized and requires no other
proceedings on the part of the Investor. The undersigned has the right, power
and authority to execute and deliver this Agreement and all other instruments
(including, without limitations, the Registration Rights Agreement), on behalf
of the Investor. This Agreement has been duly executed and delivered by the
Investor and, assuming the execution and delivery hereof and acceptance

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thereof by the Company, will constitute the legal, valid and binding obligations
of the Investor, enforceable against the Investor in accordance with its terms.

 

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

 

Section 3.3. No Legal Advice From the Company. The Investor acknowledges that it
had the opportunity to review this Agreement and the transactions contemplated
by this Agreement with his or its own legal counsel and investment and tax
advisors. The Investor is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

 

Section 3.4. Investment Purpose. The securities are being purchased by the
Investor for its own account, and for investment purposes. The Investor agrees
not to assign or in any way transfer the Investor’s rights to the securities or
any interest therein and acknowledges that the Company will not recognize any
purported assignment or transfer except in accordance with applicable Federal
and state securities laws. No other person has or will have a direct or indirect
beneficial interest in the securities. The Investor agrees not to sell,
hypothecate or otherwise transfer the Investor’s securities unless the
securities are registered under Federal and applicable state securities laws or
unless, in the opinion of counsel satisfactory to the Company, an exemption from
such laws is available.

 

Section 3.5. Accredited Investor. The Investor is and shall be on each Advance
Date, an “Accredited Investor” as that term is defined in Rule 501(a)(3) of
Regulation D of the Securities Act.

 

Section 3.6. Information. The Investor and its advisors (and its counsel), if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and information it deemed material to making an
informed investment decision. The Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its management.
Neither such inquiries nor any other due diligence investigations conducted by
such Investor or its advisors, if any, or its representatives shall modify,
amend or affect the Investor’s right to rely on the Company’s representations
and warranties contained in this Agreement. The Investor understands that its
investment involves a high degree of risk.  The Investor has sought such
accounting, legal and tax advice, as it has considered necessary to make an
informed investment decision with respect to this transaction.

 

Section 3.7. Receipt of Documents. The Investor and its counsel have received
and read in their entirety: (i) this Agreement and the Exhibits annexed hereto;
(ii) all due diligence and other information necessary to verify the accuracy
and completeness of such representations, warranties and covenants; (iii) the
Company’s most recent periodic filings filed with the SEC; and (iv) answers to
all questions the Investor submitted to the Company regarding an investment in
the Company; and the Investor has relied on the information contained therein
and has not been furnished any other documents, literature, memorandum or
prospectus.

 

Section 3.8. Registration Rights Agreement. The parties have entered into the
Registration Rights Agreement dated the date hereof.

 

Section 3.9. 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 sale of
the shares of Common Stock offered hereby.

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Section 3.10. Not an Affiliate. The Investor is not an officer, director or a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the Company or any
“Affiliate” of the Company (as that term is defined in Rule 405 of the
Securities Act).

 

Section 3.11. Trading Activities. The Investor’s trading activities with respect
to the Company’s Common Stock shall be in compliance with all applicable federal
and state securities laws, rules and regulations and the rules and regulations
of the Principal Market on which the Company’s Common Stock is listed or traded.
Neither the Investor nor its affiliates has an open short position in the Common
Stock of the Company, the Investor agrees that it shall not, and that it will
cause its affiliates not to, engage in any short sales of or hedging
transactions with respect to the Common Stock, provided that the Company
acknowledges and agrees that upon receipt of an Advance Notice the Investor has
the right to sell the shares to be issued to the Investor pursuant to the
Advance Notice during the applicable Pricing Period. 

Section 3.12

Reliance on Exemptions. The Investor  understands that the Common Stock is 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 they
Company is relying in part upon the truth and accuracy of, and such Investor’
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of such Investor set forth here in order to determine the
availability of such exemptions and the eligibility of such Investor to acquire
the Common Stock.

Section 3.13

No Governmental Review.  The Investor understands that no United States, federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Common Stock issuable pursuant to
this Agreement or the fairness or suitability of the investment in the Common
Stock nor have such authorities passed upon or endorsed the merits of the
offering of the Common Stock.

 

ARTICLE IV.

Representations and Warranties of the Company

 

Except as stated below, on the disclosure schedules attached hereto or in the
SEC Documents (as defined herein), the Company hereby represents and warrants
to, and covenants with, the Investor that the following are true and correct as
of the date hereof:

 

Section 4.1. Organization and Qualification. The Company is duly incorporated or
organized and validly existing in the jurisdiction of its incorporation or
organization and has all requisite corporate power to own its properties and to
carry on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole.

 

Section 4.2. Authorization, Enforcement, Compliance with Other Instruments. (i)
The Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement, and any related
agreements, in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Registration Rights Agreement and any
related agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by the Company’s
Board of Directors and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders provided however the Company
does not have enough shares of its authorized common stock to issue to the
Investor pursuant to this Agreement and the Company will need to (i) seek the
approval of its board of directors and stock

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holders to amend its certificate of incorporation to increase the number of
shares of common stock that it is authorized to issue to 750,000,000 shares of
common stock (“Amended Certificate of Incorporation”) and (ii) assuming the
Company’s board of directors and shareholders have approved the certificate of
amendment to the Company’s certificate of incorporation to increase the number
of shares of common stock that the Company is authorized to issue to 750,000,000
shares of common stock (“Amendment Certificate of Incorporation Approval”) and
(ii) file the Amended Certificate of Incorporation with the State of Florida
(“Amended Certificate of Incorporation Filing”), (iii) this Agreement, the
Registration Rights Agreement and any related agreements have been duly executed
and delivered by the Company, (iv) this Agreement, the Registration Rights
Agreement and assuming the execution and delivery thereof and acceptance by the
Investor and any related agreements constitute the valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.

 

Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 300,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, $0.001 par value per share (“Preferred Stock”), of which 195,558,923
shares of Common Stock and no shares of Preferred Stock are issued and
outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. Except as disclosed in the SEC Documents, no
shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in the SEC Documents, as of the date hereof, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities (iii) there are no outstanding registration
statements other than on Form S-8 and (iv) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement). Except as disclosed in the SEC
Documents, there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by this Agreement or any related
agreement or the consummation of the transactions described herein or therein.
The Company has furnished to the Investor true and correct copies of the
Company’s Certificate of Incorporation, as amended and as in effect on the date
hereof (the “Certificate of Incorporation”), and the Company’s By-laws, as in
effect on the date hereof (the “By-laws”), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

 

Section 4.4. No Conflict. Subject to the Amended Certificate of Incorporation
Approval and the Amended Certificate of Incorporation Filing the execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby will not (i) result in a
violation of the Certificate of Incorporation, any certificate of designations
of any outstanding series of preferred stock of the Company or By-laws or (ii)
conflict with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market on which the Common Stock is
quoted) applicable to the Company or any of its subsidiaries or by which any
material property or asset of the Company or any of its subsidiaries is bound or
affected and which would cause a Material Adverse Effect. Except as disclosed in
the SEC Documents, neither the Company nor its subsidiaries is in violation of
any term of or in default under its Articles of Incorporation or By-laws or
their organizational charter or by-laws, respectively, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order

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or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not being
conducted in violation of any material law, ordinance, regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
subject to the Amended Certificate of Incorporation Approval and the Amended
Certificate of Incorporation Filing and as required under the Securities Act and
any applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under or contemplated by this Agreement or the Registration
Rights Agreement in accordance with the terms hereof or thereof. 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. Subject to the Amended Certificate of Incorporation
Approval and the Amended Certificate of Incorporation Filing, the Company and
its subsidiaries are unaware of any fact or circumstance which might give rise
to any of the foregoing.

 

Section 4.5. SEC Documents; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC under the Exchange Act since the 10-KSB for the year ended
December 31, 2007. The Company has delivered to the Investor or its
representatives, or made available through the SEC’s website at
http://www.sec.gov, true and complete copies of the SEC Documents. As of their
respective dates, the financial statements of the Company disclosed in the SEC
Documents (the “Financial Statements”) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and, fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Investor which is not included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

Section 4.6. 10b-5. The SEC Documents do not include any untrue statements of
material fact, nor do they omit to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.

 

Section 4.7. No Default. Except as disclosed in the SEC Documents, the Company
is not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound (which has not been waived) and neither the
execution, nor the delivery by the Company, nor the performance by the Company
of its obligations under this Agreement or any of the exhibits or attachments
hereto will conflict with or result in the breach or violation (which has not
been waived)  of any of the terms or provisions of, or constitute a default or
result in the creation or imposition of any lien or charge on any assets or
properties of the Company under its Certificate of Incorporation, By-Laws, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound, or any statute, or any decree, judgment, order, rules or
regulation of any court or governmental agency or body having jurisdiction over
the Company or its properties, in each case which default, lien or charge is
likely to cause a Material Adverse Effect on the Company’s business or financial
condition.

 

Section 4.8. Absence of Events of Default. Except for matters described in the
SEC Documents and/or this Agreement, no Event of Default, as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (as so defined), has occurred and is continuing, which would have a
Material

9

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Adverse Effect on the Company’s business, properties, prospects, financial
condition or results of operations.

 

Section 4.9. Intellectual Property Rights. The Company and its subsidiaries own
or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

 

Section 4.10. Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. None of the
Company’s or its subsidiaries’ employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

 

Section 4.11. Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable material foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“Environmental Laws”), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

 

Section 4.12. Title. Except as set forth in the SEC Documents, the Company has
good and marketable title to its properties and material assets owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest other than such as are not material to the business of the
Company. Any real property and facilities held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.

 

Section 4.13. 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 been refused any
insurance coverage sought or applied for and 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 materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.

 

Section 4.14. Regulatory Permits. The Company and its subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

 

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Section 4.15. Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Schedule 4.15 discloses the deficiencies that have been noted in the SEC
Documents.

 

Section 4.16. No Material Adverse Breaches, etc. Except as set forth in the SEC
Documents, neither the Company nor any of its subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company’s officers has or is
expected in the future to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries. Except as set forth in the SEC Documents,
neither the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.

 

Section 4.17. Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending against or affecting the Company, the Common Stock or any of the
Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect on the business, operations,
properties, financial condition or results of operation of the Company and its
subsidiaries taken as a whole.

 

Section 4.18. Subsidiaries. Except as disclosed in the SEC Documents, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, association or other business entity.

 

Section 4.19. Tax Status. Except as disclosed in the SEC Documents, the Company
and each of its subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of its subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.

 

Section 4.20. Certain Transactions. Except as set forth in the SEC Documents
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

 

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Section 4.21. Fees and Rights of First Refusal. Except for the Company’s
contractual arrangement with Enable Capital Partners in existence prior to the
date of this Agreement and as set forth on Schedule 4.21,  the Company is not
obligated to offer the securities offered hereunder on a right of first refusal
basis or otherwise to any third parties including, but not limited to, current
or former shareholders of the Company, underwriters, brokers, agents or other
third parties.

 

Section 4.22. Use of Proceeds. The Company shall use the net proceeds from this
offering for general corporate purposes, including, without limitation, the
payment of loans incurred by the Company. However, in no event shall the Company
use the net proceeds from this offering for the payment (or loan to any such
person for the payment) of any judgment, or other liability, incurred by any
executive officer, officer, director or employee of the Company, except for any
liability owed to such person for services rendered, [expense reimbursement] or
if any judgment or other liability is incurred by such person originating from
services rendered to the Company, or the Company has indemnified such person
from liability.

 

Section 4.23. Further Representation and Warranties of the Company. For so long
as any securities issuable hereunder held by the Investor remain outstanding,
the Company acknowledges, represents, warrants and agrees that it will use its
best efforts to maintain the listing of its Common Stock on the Principal
Market.

  

Section 4.25. Opinion of Counsel. The Company will obtain, subject to applicable
securities laws, for the Investor, at the Company’s expense, any and all
opinions of counsel which may be reasonably required in order to sell the
securities issuable hereunder without restriction.

 

Section 4.26. Dilution. The Company is aware and acknowledges that issuance of
shares of the Company’s Common Stock could cause dilution to existing
shareholders and could significantly increase the outstanding number of shares
of Common Stock.

 

ARTICLE V.

Indemnification

 

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

 

Section 5.1. Indemnification.

 

(a) In consideration of the Investor’s execution and delivery of this Agreement,
and in addition to all of the Company’s other obligations under this Agreement,
the Company shall defend, protect, indemnify and hold harmless the Investor, and
all of its officers, directors, partners, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Investor Indemnitees”) from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Investor Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
the Investor Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnitees. To the

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extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible under
applicable law. Notwithstanding anything to the contrary herein, the Company
will not be liable to any Investor Indemnitee under this Agreement (d) for any
settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (e) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Investor Indmnitees’s breach of any of the representations,
warranties, covenants or agreements made by such Investor Indemnitee in this
Agreement or in the other Registration Rights Agreement or any other document
executed pursuant to or in connection with this Agreement.

(b) In consideration of the Company’s execution and delivery of this Agreement,
and in addition to all of the Investor’s other obligations under this Agreement,
the Investor shall defend, protect, indemnify and hold harmless the Company and
all of its officers, directors, shareholders, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company Indemnitees”) from
and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b) any
breach of any covenant, agreement or obligation of the Investor(s) contained in
this Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor,
or (c) any cause of action, suit or claim brought or made against such Company
Indemnitee based on misrepresentations or due to a breach by the Investor and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees. To the extent that
the foregoing undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.

 

(c) The obligations of the parties to indemnify or make contribution under this
Section 5.1 shall survive termination.

 

ARTICLE VI.

Covenants of the Company

 

Section 6.1. RESERVED.

 

Section 6.2. Listing of Common Stock. During the term of the Commitment Period,
the Company shall maintain the Common Stock’s authorization for quotation on the
Principal Market.

 

Section 6.3. Exchange Act Registration. During the term of the Commitment
Period, the Company will cause its Common Stock to continue to be registered
under Section 12(g) of the Exchange Act, will file in a timely manner all
reports and other documents required of it as a reporting company under the
Exchange Act and will not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Exchange Act.

Section 6.4. Transfer Agent Instructions. Upon effectiveness of the Registration
Statement the Company shall deliver instructions to its transfer agent to issue
shares of Common Stock to the Investor free of restrictive legends on or before
each Advance Date.

 

Section 6.5. Corporate Existence. During the Commitment period, the Company will
take all steps necessary to preserve and continue the corporate existence of the
Company.

 

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

Section 6.7. Restriction on Sale of Capital Stock. During the Commitment Period,
the Company shall not, without the prior written consent of the Investor, (i)
issue or sell any Common Stock or Preferred Stock without consideration or for a
consideration per share less than the Bid Price of the Common Stock determined
immediately prior to its issuance, or (ii) issue or sell any Preferred Stock
warrant, option, right, contract, call, or other security or instrument granting
the holder thereof the right to acquire Common Stock without consideration or
for a consideration per share less than the Bid Price of the Common Stock
determined immediately prior to its issuance. Notwithstanding the foregoing this
Section shall not apply in respect of an Exempt Issuance or an underwritten
public offering of Common Stock.  For purposes of this Agreement “Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers, directors or consultants of the Company pursuant to any
stock or option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the members of a
committee of non-employee directors established for such purpose, (b) securities
upon the exercise or exchange of or conversion of any Securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities or to decrease the
exercise, exchange or conversion price of such securities,(c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities and (d) the issuance of Common Stock set forth on
Schedule 6.7.

Section 6.8. Consolidation; Merger. During the Commitment Period, the Company
shall not, at any time after the date hereof, effect any merger or consolidation
of the Company with or into, or a transfer of all or substantially all the
assets of the Company to another entity (a “Consolidation Event”) unless the
resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Investor such shares of stock and/or
securities as the Investor is entitled to receive pursuant to this Agreement.

 

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Section 6.9. Issuance of the Company’s Common Stock. The sale of the shares of
Common Stock shall be made in accordance with the provisions and requirements of
Regulation D and any applicable state securities law.

 

Section 6.10. Review of Public Disclosures. All SEC filings (including, without
limitation, all filings required under the Exchange Act, which include Forms
10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other public disclosures made by
the Company, including, without limitation, all press releases, investor
relations materials, and scripts of analysts meetings and calls, shall be
reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public accountants.

 

Section 6.11. Market Activities. The Company will not, directly or indirectly,
(i) take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Common Stock or (ii) sell, bid for or purchase the Common Stock, or pay anyone
any compensation for soliciting purchases of the Common Stock.

 

ARTICLE VII.

Conditions for Advance and Conditions to Closing

 

Section 7.1. Conditions Precedent to the Obligations of the Company. The
obligation hereunder of the Company to issue and sell the shares of Common Stock
to the Investor incident to each Closing is subject to the satisfaction, or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.

 

(a) Accuracy of the Investor’s Representations and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects.

 

(b) Performance by the Investor. The Investor shall have performed, satisfied
and complied in all respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Investor at or prior to such
Closing.

    

Section 7.2. Conditions Precedent to the Right of the Company to Deliver an
Advance Notice. The right of the Company to deliver an Advance Notice is subject
to the fulfillment by the Company, on such Advance Notice (a “Condition
Satisfaction Date”), of each of the following conditions:

 

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

 

(b) Authority. The Company shall have obtained all permits and qualifications
required by any applicable state in accordance with the Registration Rights
Agreement for the offer and sale of the

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shares of Common Stock, or shall have the availability of exemptions therefrom.
The sale and issuance of the shares of Common Stock shall be legally permitted
by all laws and regulations to which the Company is subject.

 

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

 

(d) Performance by the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.

 

(e) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits or
directly and adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced that may have the effect
of prohibiting or adversely affecting any of the transactions contemplated by
this Agreement.

 

(f) No Suspension of Trading in or Delisting of Common Stock. The trading of the
Common Stock is not suspended by the SEC or the Principal Market (if the Common
Stock is traded on a Principal Market). The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not violate the
shareholder approval requirements of the Principal Market (if the Common Stock
is traded on a Principal Market). The Company shall not have received any notice
threatening the continued listing of the Common Stock on the Principal Market
(if the Common Stock is traded on a Principal Market).

 

 

(g) Maximum Advance Amount. The amount of an Advance requested by the Company
shall not exceed the Maximum Advance Amount. In addition, in no event shall the
number of shares issuable to the Investor pursuant to an Advance cause the
aggregate number of shares of Common Stock beneficially owned by the Investor
and its affiliates to exceed nine and 9/10 percent (9.9%) of the then
outstanding Common Stock of the Company. For the purposes of this section
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act.

 

(h) No Knowledge. The Company has no knowledge of any event which would be more
likely than not to have the effect of causing such Registration Statement to be
suspended or otherwise ineffective.

 

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

 

ARTICLE VIII.

Due Diligence Review; Non-Disclosure of Non-Public Information

 

Section 8.1. Non-Disclosure of Non-Public Information.

 

(a) The Company covenants and agrees that it shall refrain from disclosing, and
shall cause its officers, directors, employees and agents to refrain from
disclosing, any material non-public information to the Investor without also
disseminating such information to the public, unless prior to disclosure of such
information the Company identifies such information as being material non-public
information and

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provides the Investor with the opportunity to accept or refuse to accept such
material non-public information for review.

 

(b) Nothing herein shall require the Company to disclose non-public information
to the Investor or its advisors or representatives, and the Company represents
that it does not disseminate non-public information to any investors who
purchase stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding anything herein to
the contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

 

ARTICLE IX.

Choice of Law/Jurisdiction

 

Section 9.1. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard in the State of California, and expressly consent to
the jurisdiction and venue of the courts, sitting in California and the United
States District Court of California for the adjudication of any civil action
asserted pursuant to this paragraph.

 

ARTICLE X.

Assignment; Termination

 

Section 10.1. Assignment. Neither this Agreement nor any rights of the Company
hereunder may be assigned to any other Person.

 

Section 10.2. Termination.

 

(a) The obligations of the Investor to make Advances under Article II hereof
shall terminate twenty-four (24) months after the Effective Date or thirty six
(36) months after the Effective Date if twenty-four (24) months after the
Effective Date the Company filed either an amendment to the then effective
registration statement or a new registration statement was declared effective.
The Company’s obligations under this Agreement shall terminate on the date that
the Investor is no longer obligated to make Advances.  

 

(b) The obligation of the Investor to make an Advance to the Company pursuant to
this Agreement shall terminate permanently (including with respect to an Advance
Date that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for an
aggregate of fifty (50) Trading Days, other than due to the acts of the
Investor, during the Commitment Period, or (ii) the Company shall at any time
fail materially to comply with the requirements of Article VI and such failure
is not cured within thirty (30) days after receipt of

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written notice from the Investor, provided, however, that this termination
provision shall not apply to any period commencing upon the filing of a
post-effective amendment to such Registration Statement and ending upon the date
on which such post effective amendment is declared effective by the SEC.

(c)

In the event that the price of the Company’s Common Stock remains at a price
equal to 50% of the Floor Price for a period of at least 90 consecutive days or
more, then the Company may terminate this Agreement by providing Investor 45
days written notice of its intent to terminate.   

 

ARTICLE XI.

Notices

 

Section 11.1. Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy
is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested, or (iv) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

 

If to the Company, to:

Cord Blood America, Inc.

 

501 Santa Monica Blvd. Suite 700

Santa Monica, California 90401

 

 

 

Attention:

Matthew Schissler

 

Telephone:

310.432.4090

 

Facsimile:

310.432.4098

 

 

 

 

With a copy to : Darrin Ocasio, Esq.

                           Sichenzia Ross Friedman Ference LLP

                           61 Broadway, 32 Floor

                           New York, NY 10006

 

 

 

 

Tangiers Investors, LP

 

If to the Investor(s):

Edward Liceaga

 

1446 Front Street

Suite 400

 

San Diego, California 92101

 

 

 

 

Telephone:  

619-398-9264

 

Facsimile:  

619-566-2011

Each party shall provide five (5) days’ prior written notice to the other party
of any change in address or facsimile number.

 

ARTICLE XII.

Miscellaneous

 

Section 12.1. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof, though failure to deliver such copies shall not affect the
validity of this Agreement.

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Section 12.2. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Investor, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
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 Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

 

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

 

Section 12.4. Commitment Fee. The Company hereby agrees to pay the following
fees:

(a) Upon the execution of this Agreement the Company shall issue to the Investor
shares of Common Stock in an amount equal to One Hundred Sixty Thousand
Dollars ($160,000) divided by the lowest VWAP of the Company’s Common Stock, as
quoted by Bloomberg, LP, on the date hereof (the “Investor’s Shares”).

 

(b) Fully Earned. The Investor’s Shares shall be deemed fully earned as of the
date hereof.

 

(c) Registration Rights. The Investor’s Shares will have “piggy-back”
registration rights.

 

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

 

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

 

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.

 

COMPANY:

Cord Blood America, Inc.

 

 

 

 

 

/s/ Matthew Schissler________

Name:

Matthew Schissler

Title:

Chief Executive Officer

 

 

 

 

INVESTOR:

Tangiers Investors, LP

 

 

 

 

 

/s/  Edward Liceaga _________

By:

Tangiers Capital, LLC

Its:

General Partner

 

 

 

 

20

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EXHIBIT A

 

ADVANCE NOTICE

 

CORD BLOOD AMERICA, INC.

 

The undersigned, _______________________ hereby certifies, with respect to the
sale of shares of Common Stock of CORD BLOOD AMERICA, INC. (the “Company”)
issuable in connection with this Advance Notice, delivered pursuant to the
Securities Purchase Agreement (the “Agreement”), as follows:

 

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

 

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

 

3.  The Company has performed in all material respects all covenants and
agreements to be performed by the Company and has complied in all material
respects with all obligations and conditions contained in the Agreement on or
prior to the Advance Notice Date, and shall continue to perform in all material
respects all covenants and agreements to be performed by the Company through the
applicable Advance Date. All conditions to the delivery of this Advance Notice
are satisfied as of the date hereof.

 

4. The undersigned hereby represents, warrants and covenants that it has made
all filings (“SEC Filings”) required to be made by it pursuant to applicable
securities laws (including, without limitation, all filings required under the
Securities Exchange Act of 1934, which include Forms 10-Q or 10-QSB, 10-K or
10-KSB, 8-K, etc.). All SEC Filings and other public disclosures made by the
Company, including, without limitation, all press releases, analysts meetings
and calls, etc. (collectively, the “Public Disclosures”), have been reviewed and
approved for release by the Company’s attorneys and, if containing financial
information, the Company’s independent certified public accountants. None of the
Company’s Public Disclosures contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

 

5. The Advance requested is _____________________.

 

The undersigned has executed this Certificate this ____ day of
_________________.

 

CORD BLOOD AMERICA, INC.

 

 

By:

 

Name:

 

Title:

 

If Returning This Advance Notice via Facsimile Please Send To: (201) 946-0851

If by Mail, via Federal Express To:

Tangiers Investors, LP

 

1446 Front Street, Suite 400, San Diego, CA 92101

21

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EXHIBIT B

 

CORD BLOOD AMERICA, INC.

 

The undersigned hereby agrees that for a period commencing on June ___, 2008 and
expiring on the termination of the Securities Purchase Agreement dated June ___,
2009 between the Company and the Investor (the “Lock-up Period”), he, she or it
will not, directly or indirectly, without the prior written consent of the
Investor, issue, offer, agree or offer to sell, sell, grant an option for the
purchase or sale of, transfer, pledge, assign, hypothecate, distribute or
otherwise encumber or dispose of any securities of the Company, including common
stock or options, rights, warrants or other securities underlying, convertible
into, exchangeable or exercisable for or evidencing any right to purchase or
subscribe for any common stock (whether or not beneficially owned by the
undersigned), or any beneficial interest therein (collectively, the
“Securities”) except in accordance with the volume limitations set forth in Rule
144(e) of the General Rules and Regulations under the Securities Act of 1933, as
amended.

 

In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
transfer agent of the Company’s securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned’s investment in
the Company.

 

Dated: _______________, 2008

Signature

 

 

Name: _______________________________________

Address: _____________________________________

City, State, Zip Code: ____________________________

 

 

Print Social Security Number

or Taxpayer I.D. Number

22

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SCHEDULE 4.15

 

SEC Deficiencies 

SCHEDULE 4.21

 

Contractual Arrangement with Enable Capital Partners

SCHEDULE 6.7

 

Issuance of Common Stock

23