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Exhibit 10.1
 
EXECUTION COPY
 

 
BONDS.COM GROUP, INC.

UNIT PURCHASE AGREEMENT

August 28, 2009

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EXECUTION COPY
 
 
BONDS.COM HOLDINGS, INC.

UNIT PURCHASE AGREEMENT

This Unit Purchase Agreement (the “Agreement”) is made as of August 28, 2009
(the “Effective Date”) by and between Bonds.com Group, Inc., a Delaware
corporation (the “Company”) and Fund Holdings LLC, a Florida limited liability
company (the “Purchaser”).
 
RECITALS

Subject to the terms and conditions set forth in this Agreement and pursuant to
Sections 4(2) and 4(6) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to Purchaser, and Purchaser desires to purchase from the Company,
Units (as defined below) of securities of the Company, as more fully described
in this Agreement. As used herein, each “Unit” shall consist of: (i) 2,667
shares of common stock of the Company (the “Common Stock”); (ii) the right,
within three years of the applicable Closing Date (as defined below) upon which
the Unit is purchased, to purchase 9,597 (as equitably adjusted for stock
splits, combinations and the like) additional shares of Common Stock at a
purchase price of $0.375 (as equitably adjusted for stock splits, combinations
and the like) per share (the “Ordinary Purchase Rights”), and (iii) in the event
that the Closing Requirements (as defined below) are achieved, the Additional
Rights (as defined below).  The Units, the Common Stock, the Ordinary Purchase
Rights, the Additional Purchase Rights, the Special Purchase Rights (as defined
below, and together with the Ordinary Purchase Rights, the Additional Purchase
Rights, the “Rights”) and the shares of Common Stock to be issued pursuant to
the exercise of the Rights are referred to herein as the “Securities”.
 
AGREEMENT

In consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:
 
1.         Purchase and Sale of Securities.
 
(a)           Purchase of Units.
 
   (i)          Units.  Subject to the satisfaction (or waiver) of the
conditions set forth herein, the Company shall issue and sell to the Purchaser,
and the Purchaser agrees to purchase from the Company on the applicable Closing
Date (as defined below), the number of Units set forth below.
 
   (ii)          Closings.  The time of each Closing shall be 10:00 A.M.,
Eastern Standard Time or such later time as is mutually agreed to by the Company
and Purchaser.
 
     (A)           Initial Closing.  In one or more closings starting on the
Effective Date (the “Initial Closing Date”) and ending on September 2, 2009 (the
“Final Initial Closing Date”), the Purchaser shall purchase 1,000 Units (the
“Initial Closing”) and the Company shall sell to the Purchaser 1,000 Units.
 

 
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     (B)           Second Closing.  Within 45 days following the Effective Date
(the “Second Closing Date”), the Purchaser shall purchase an additional 1,000
Units (the “Second Closing”) and the Company shall sell to the Purchaser an
additional 1,000 Units.  As a condition to the Second Closing, the Company will
update the Disclosure Schedule and the representations and warranties set forth
in Section 2 hereof.
 
     (C)           Third Closing.  Within 90 days following the Effective Date
(the “Third Closing Date”, and together with each of the Initial Closing Dates
and the Second Closing Date, the “Unit Closing Dates”), the Purchaser shall
purchase an additional 3,000 Units (the “Third Closing”, and together with the
Initial Closing and the Second Closing, the “Unit Closings”) and the Company
shall sell to the Purchaser an additional 3,000 Units.  As a condition to the
Third Closing, the Company will update the Disclosure Schedule and the
representations and warranties set forth in Section 2 hereof.
 
   (iii)         Purchase Price.  The purchase price for each Unit (the
“Purchase Price”) shall be One Thousand Dollars ($1,000).
 
(iv)         Closing Requirements.  The consummation of the Second Closing
within 45 days following the Effective Date and the consummation of the Third
Closing within 90 days following the Effective Date  shall be referred to herein
as the “Closing Requirements”.
 
(v)         Form of Payment.  On each respective Unit Closing Date, subject to
the satisfaction of the conditions to closing, each Purchaser shall deliver by
wire transfer to an account designated by the Company, no later than the close
of business on such respective Unit Closing Date, the aggregate Purchase Price
for the Units purchased on such respective Unit Closing Date.
 
(vi)         Location of Closing.  Each Closing shall take place at the offices
of Becker Legal Group LLC, 1178 Broadway, Suite 331, New York, New York
10001.  Alternatively, the Unit Closings can take place by the exchange of final
executed closing documents between legal counsel for the Company and Purchaser.
 
(vii)        Deliverables of Company at Closing. On the applicable Unit Closing
Date, the Company shall deliver to the Purchaser: (i) a certificate representing
the number of shares of Common Stock to be purchased at such Unit Closing Date
by the Purchaser, and (ii) an executed copy of this Agreement.
 
(viii)       Deliverables of Purchaser at Closing.  On the applicable Unit
Closing Date, the Purchaser shall deliver to the Company: (i) an executed copy
of this Agreement, and (ii) the applicable consideration provided for in Section
1(a)(iii) hereof.
 
(ix)         Fractional Units.  No fractional Units shall be sold by the
Company.
 
(x)         Use of Proceeds. The proceeds from the sale of the Units will be for
general working capital of the Company.
 
(b)           Additional Purchase Rights.
 

 
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(i)           Definitions.  In addition to the terms defined above and herein,
the following terms used in this Agreement shall have the meanings set forth
below:
 
  (A)          “Additional Rights Exercise Period” shall mean, with respect to
any Additional Purchase Rights, the period beginning on the Trigger Date and
ending on the date that is three years following the Trigger Date.
 
  (B)           “Adjusted Number of Convertible Shares” shall mean 26,893,580
(as equitably adjusted for stock splits, combinations and the like), less the
amount of Convertible Securities (as equitably adjusted for stock splits,
combinations and the like) that have expired, terminated or otherwise become
unissuable pursuant to the terms of the relevant promissory note, warrant or
option.
 
  (C)           “Converted Shares” shall mean shares of Common Stock actually
issued and outstanding upon the conversion or exercise (as applicable) of the
Existing Convertible Securities.
 
  (D)           “Existing Convertible Securities” shall mean each outstanding
convertible promissory note, warrant and option of the Company set forth on
Schedule I.
 
  (E)           “Trigger Date” shall mean the date, if any, upon which Converted
Shares are issued upon the conversion or exercise (as applicable) of Existing
Convertible Securities.
 
(ii)          Additional Rights.  Following the date on which the Closing
Requirements are met and as of each Trigger Date, the Purchaser shall
automatically, without any further action upon the part of the Purchaser or the
Company, be entitled to purchase (an “Additional Purchase Right”) at a price of
$0.375 per share (as equitably adjusted for stock splits, combinations and the
like) during the applicable Additional Rights Exercise Period such number of
shares of Common Stock as is equal to the Converted Shares  issued by the
Company on such Trigger Date.  In no event shall the aggregate number of shares
purchasable (including any shares previously purchased) under the Additional
Purchase Rights exceed the Adjusted Number of Convertible Shares.
 
(iii)         Calculation of Shares Underlying Additional Purchase Rights.  Upon
reasonable request by the Purchaser, but in no event more than one time in any
calendar quarter, the Company shall prepare a statement indicating the amount of
Additional Purchase Rights currently exercisable as of such date and the
applicable time period for which such Additional Purchase Rights may be
exercised.
 
(iv)         Termination of Additional Purchase Rights.  Notwithstanding the
foregoing, in the event that less than 5,000 Units have been purchased by the
Purchaser as of the date that is 120 days following the Initial Closing, all
Additional Purchase Rights shall immediately terminate and the provisions
contained in this Section 1(b) shall be of no further force or effect.
 

 
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(c)           Special Purchase Rights.  Upon the Final Initial Closing Date, in
addition to the Ordinary Purchase Rights and the Additional Purchase Rights, the
Purchaser shall be granted the right (the “Special Purchase Rights”) to purchase
1,000,000 (as equitably adjusted for stock splits, combinations and the like)
shares of Common Stock at a price per share equal to $0.375 per share (as
equitably adjusted for stock splits, combinations and the like).
 
(d)           Exercise of Rights. Subject to the terms and provisions contained
herein,
 
(i)          The Ordinary Purchase Rights may be exercised at any time from the
applicable Closing Date upon which the Unit pertaining to such Ordinary Purchase
Rights is purchased until the date which is three years from such date (the
"Ordinary Rights Exercise Period").
 
(ii)          The Additional Purchase Rights may be exercised at any time within
the applicable Additional Rights Exercise Period.
 
(iii)         The Special Purchase Rights may be exercised at any time from the
Final Initial Closing Date until the date that is three years from the Final
Initial Closing Date (the "Special Rights Exercise Period” and together with the
Ordinary Rights Exercise Period and Additional Exercise Period, the “Exercise
Period”).
 
(iv)         Within the applicable Exercise Period as the case may be, the
Rights may be exercised in whole or in part at the price per share of $0.375 per
share of Common Stock (each, the “Rights Exercise Price”), such number of shares
of Common Stock and Rights Exercise Price subject to equitable adjustment for
stock splits, combinations and the like, payable by certified wire transfer to
an account designated by the Company.  Upon delivery of a Notice of Exercise
Form duly executed in the form attached as Schedule II hereto (which Notice of
Exercise Form may be submitted by delivery to the Company), together with
payment of the aggregate Rights Exercise Price for the shares of Common Stock
purchased, the Purchaser shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased.
 
2.         Representations and Warranties of the Company.  The Company hereby
represents and warrants to each Purchaser as of the Effective Date, as follows:
 
(a)           Organization and Qualification.  The Company and its Subsidiaries
(as set forth on Schedule 2(a) hereto) are entities duly organized and validly
existing and, to the extent legally applicable, in good standing under the laws
of the State of Delaware and have the requisite power and authorization to own
their properties and to carry on their business as now being conducted.  Each of
the Company and its Subsidiaries is duly qualified as a foreign entity to do
business and to the extent legally applicable, is in good standing in every
jurisdiction in which its ownership of property or 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 reasonably be
expected to have a Material Adverse Effect (as defined below).  As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on the
business, properties, assets, operations, results of operations, or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
or on the transactions contemplated hereby or the other Transaction Documents
(as defined below) or the other instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents
 

 
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(b)           Authorization; Enforcement; Validity.  The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and each of the other agreements entered into
by the parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents") and to issue the
Securities in accordance with the terms hereof and thereof.  The execution and
delivery of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Units, the Ordinary Purchase Rights, the
Additional Purchase Rights, the Special Purchase Rights and the reservation for
issuance and the issuance of the shares (the “Underlying Shares”) upon exercise
of the the Ordinary Purchase Rights, the Additional Purchase Rights, and the
Special Purchase Rights, have been duly authorized by the Company's Board of
Directors and no further filing, consent, or authorization is required by the
Company, its Board of Directors or its stockholders.  This Agreement and the
other Transaction Documents have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the 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 or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
 
(c)           Issuance of Securities.  The Securities are duly authorized and,
when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.
 
(d)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Securities) will not (i) result in a violation of any
certificate of incorporation, certificate of formation, any certificate of
designations or other constituent documents of the Company or any of its
Subsidiaries, any capital stock of the Company or any of its Subsidiaries or
bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default or breach (or an event which with notice or lapse of time
or both would become a default or breach) in any respect 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 (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including foreign, federal and state
securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii)
above, to the extent that such violations conflict, default or right would not
reasonably be expected to have a Material Adverse Effect.
 

 
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(e)           Consents.  Neither the Company nor any of its Subsidiaries is
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person (as defined below) in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof.  “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof
 
(f)           Capitalization. The Company has not issued any capital stock since
its most recently filed periodic report under the Exchange Act, other than
capital stock issued: (i) pursuant to the terms hereof, (ii) by the Company and
reported by the Company pursuant to a Current Report filed on Form 8K under the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the “Exchange Act”), (iii) pursuant to stock options
under the Company’s stock option plans and/or the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plans or
(iv) upon the conversion or exercise of securities of the Company outstanding as
of the date of the most recently filed periodic report under the Exchange Act.
No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
 
(g)           SEC Reports; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, except as
disclosed in Schedule 2(g), the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, 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 the light of the
circumstances under which they were made, not misleading. Except as disclosed in
Schedule 2(g), the financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, 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.
 
 
 
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(h)          Material Changes. Except as set forth on Schedule 2(h) or elsewhere
on the schedules hereto, since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
a subsequent SEC Report filed prior to the date hereof: (i) there has been no
event, occurrence, development or regulatory action that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
Except as set forth on Schedule 2(h), the Company does not have pending before
the Commission any request for confidential treatment of information. Except for
the issuance of the Securities contemplated by this Agreement or as set forth on
Schedule 2(h) or elsewhere on the Schedules hereto, no event, liability or
development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 trading day prior to the
date that this representation is made.
 
(i)            Litigation. Except as disclosed within the SEC Reports or in
Schedule 2(i), there is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.
 
(j)            Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or its Subsidiaries’ employees is a member of a
union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good.
 
(k)           Compliance. Neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body or (iii) is
or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws applicable to its business and all such laws that affect the environment,
except in each case as could not have or reasonably be expected to result in a
Material Adverse Effect.
 
 
 
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(l)           Regulatory Permits. To the Company’s knowledge, the Company and
the Subsidiaries possess all certificates, authorizations and permits issued by
the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not reasonably
be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
 
(m)          Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
security interests, liens, claims, charge or encumbrances (“Liens”), except for
(i) liens for current taxes not yet due, (ii) minor imperfections of title, if
any, not material in amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations of
the Company or (iii) Permitted Liens (as defined below).
 
(n)           Patents and Trademarks. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or material for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the
Company nor any Subsidiary has received a notice (written or otherwise) that any
of the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any third party. To the knowledge of
the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by any third party of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
 
(o)           Intentionally Omitted.
 
(p)           Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3 hereof, no registration
under the Securities Act is required for the offer and sale of the Securities by
the Company to the Purchasers as contemplated hereby.
 
(q)           Transactions With Affiliates and Employees. Other than as
contemplated herein or described in SEC Reports, and except as set forth on
Schedule 2(q), none of the officers, directors, employees and/or affiliates of
Company or the Subsidiaries is a party to any transaction with Company or any
Subsidiary (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 employee or such affiliate or, to the knowledge of Company, any entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee, partner or affiliate other than (a) for
payment of salary or consulting fees for services rendered, (b) reimbursement
for expenses incurred on behalf of Company and (c) for other employee benefits,
including stock option agreements under any stock option plan of Company, which
in the aggregate (for the total amount in (a), (b) and (c) combined) does not
exceed the amount of $25,000 for any officer, director, employee or affiliate.
 
 
 
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(r)           Registration Rights. Except as provided herein or as set forth in
Schedule 2(r), no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
 
(s)           No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has offered or sold any of the Securities by any form
of general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
 
(t)            Disclosure. All disclosure furnished by or on behalf of the
Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
 
3.         Representations and Warranties of the Purchaser.  The Purchaser
hereby represents, warrants and covenants to the Company that:
 
(a)           Authorization. Such Purchaser has full power and authority to
enter into this Agreement.  This Agreement,  when executed and delivered by the
Purchaser, will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies.
 
(b)           Purchase Entirely for Own Account.  This Agreement is made with
the Purchaser in reliance upon the Purchaser’s representation to the Company,
which by the Purchaser’s execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser’s own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same.  By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring any of the Securities.
 
 
 
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(c)           Knowledge.  The Purchaser is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. The Purchaser has had the opportunity to review and read the SEC
Reports, including without limitation the “Risk Factors” set forth therein, and
hereby acknowledge that they understand the disclosures made in such SEC Reports
and the existence of such “Risk Factors”.
 
(d)           Restricted Securities.  The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser’s representations as
expressed herein.  The Purchaser understands that the Securities are “restricted
securities” under applicable U.S. federal, state and province securities laws
and that, pursuant to these laws, the Purchaser must hold
the Securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available.  Other than as
set forth herein, the Purchaser acknowledges that the Company has no obligation
to register or qualify the Securities for resale.  The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser’s
control, and which the Company is under no obligation and may not be able to
satisfy.
 
(e)           General Solicitation. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
 
(f)           Short Sales and Confidentiality Prior To The Date Hereof. Other
than consummating the transactions contemplated hereunder, such Purchaser has
not directly or indirectly, nor has any person or entity acting on behalf of or
pursuant to any understanding with such Purchaser, executed any purchases or
sales, including “short sales" as defined in Rule 200 of Regulation SHO under
the Exchange Act, of the securities of the Company (“Stock Transactions”) during
the period commencing from the time that such Purchaser first received a term
sheet (written or oral) from the Company or any other person or entity
representing the Company setting forth the material terms of the transactions
contemplated hereunder until the date hereof (“Discussion Time”). The Purchaser
further agrees not to engage in any Stock Transactions until the Company files a
Current Report on Form 8K under the Exchange Act which annexes copies of the
Transaction Documents thereto.  The Company covenants to file such Current
Report on Form 8K under the Exchange Act within five trading days of the
Effective Date.
 
(g)           Accredited Investor.  The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act and
has accurately and truthfully completed the Accredited and FINRA Questionnaire
attached hereto as Exhibit A.
 
 
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4.         Intentionally Omitted.
 
5.         Other Agreements of the Parties.
 
(a)           Transfer Restrictions.
 
(i)          The Securities may only be disposed of in compliance with state and
federal securities laws.  In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an affiliate of Purchaser, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement.
 
(ii)          The Purchaser agrees to the imprinting, so long as is required by
this Section 5(a), of a legend on any of the Securities in the following form:
 
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
 
(b)           Removal of Legend. Certificates evidencing the Securities shall
not contain any legend (including the legend set forth in Section 4(a) hereof):
(i) while a registration statement covering the resale of such security is
effective under the Securities Act, or (ii) following any sale of such
Underlying Shares pursuant to Rule 144, or (iii) if such Securities are eligible
for sale under Rule 144, without the requirement for the Company to be in
compliance with the current public information required under Rule 144 as to
such Securities and without volume or manner-of-sale restrictions, or (iv) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission).  The Company agrees that at such time as such legend is no
longer required under this Section 4(b), it will, no later than three trading
days following the delivery by a Purchaser to the Company or the Company’s
transfer agent of a certificate representing the Securities, as applicable,
issued with a restrictive legend (such third trading day, the "Legend Removal
Date"), along with an acceptable legal opinion and broker representation letter,
deliver or cause to be delivered to such Purchaser a certificate representing
such shares that is free from all restrictive and other legends.  The Company
may not make any notation on its records or give instructions to the Company’s
transfer agent that enlarge the restrictions on transfer set forth in this
Section.
 
 
 
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(c)           Compliance with Securities Act.  Purchaser agrees that such
Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a registration statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Securities as set forth in
Section 4(b) is predicated upon the Company's reliance upon this understanding.
 
(d)           Furnishing of Information.  Until the time that Purchaser no
longer owns Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.  As long as Purchaser owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell the
Securities under Rule 144.  The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.
 
(e)           Disclosure; Publicity.  Purchaser shall not issue any other press
release or other public disclosure with respect to the transactions contemplated
hereby, and neither the Company nor Purchaser shall issue any such press release
or otherwise make any such public statement without the prior consent of the
Company.
 
(f)            Form D and Blue Sky. If required, Company shall file a Form D
with respect to the issuance of the Rights (or the issuance of the underlying
Common Stock) as required under Regulation D under the Securities Act and, upon
written request, provide a copy thereof to Purchaser promptly after such filing.
The Company shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities for
sale to Purchaser pursuant to the terms hereof under applicable securities or
“Blue Sky” laws of the states of the United States, and shall provide evidence
of any such action so taken to Purchaser promptly after such filing.  However,
the Company shall not be required to execute any general consent to service of
process in order to obtain such blue sky clearance, except in a jurisdiction
where the Company is already subject to such process.
 
(g)           Lock Up.  Provided that the Closing Requirements have been
satisfied, for a period of 30 days after the Third Closing, the Company shall
not, and shall use its reasonable efforts to cause its officers, employees,
advisors, consultants and agents to not (i) solicit, encourage, entertain,
initiate or engage in any discussions or negotiations with, or provide any
information to, or take any other action with the intent to facilitate the
efforts of, any third party relating to any possible agreement or other
arrangement involving the sale of its capital stock for the purpose of raising
capital for the Company (a “Company Prohibited Transaction”), or (ii) authorize,
execute, consummate, enter into an agreement or commitment with respect to a
Company Prohibited Transaction.  Notwithstanding the foregoing, this Section
5(g) shall not be violated if the Company's board of directors must take any of
the foregoing actions in connection with a Company Prohibited Transaction in
order to avoid breaching their fiduciary obligations to the Company.
 
 
 
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(h)           Reverse Stock Split.  As soon as reasonably practicable following
the Third Closing Date, the Company shall take all commercially reasonable
efforts to effectuate a reverse stock split on such terms as determined by the
Board, including the affirmative vote of Chairman Knetzger (to the extent that
Mr. Knetzger remains on the Board of Directors of the Company).
 
(i)            Expenditures.  For a period of three years following the
Effective Date, the Company shall take such actions necessary to ensure that (i)
the Company’s annual operating budget (the “Company Operating Budget”) shall
require the approval of the Board of Directors and the affirmative vote of
Chairman Knetzger (to the extent that Mr. Knetzger remains on the Board of
Directors of the Company), (ii) any expenditure in excess of $10,000 which has
not previously been approved as part of the Company’s Operating Budget shall
require the consent of the Board of Directors and the affirmative vote of
Chairman Knetzger  (to the extent that Mr. Knetzger remains on the Board of
Directors of the Company) and (iii) the Purchaser is notified in advance of any
dividends or distributions paid to Stockholders of the Company.
 
(j)            Board Observer.  Immediately following the Final Initial Closing
Date, Mark G. Hollo shall be appointed as a non-voting Special Advisor to the
Board of Directors for a period of three (3) years from the Final Initial
Closing Date, subject to Mr. Hollo’s execution of a confidentiality agreement
and assignment of inventions agreement reasonably acceptable to the Company and
Mr. Hollo.  After the date of his appointment, Mr. Hollo shall be entitled to
the same expense reimbursement and compensation, if any, that is provided to the
entire board of directors.
 
(k)           Directors’ and Officers’ Insurance. The Company will maintain
directors’ and officers’ insurance for the directors and officers of the Company
on terms acceptable to the Board of Directors, including the affirmative vote of
Chairman Knetzger (to the extent that Mr. Knetzger remains on the Board of
Directors of the Company).
 
(l)            Termination of Covenants.  In the event that less than 5,000
Units have been purchased by the Purchaser prior to the date that is 120 days
following the Effective Date,  the covenants contained in Sections 5(h), (i) and
(j) shall terminate and be of no further force or effect.
 
6.         Registration Rights.
 
(a)           Definitions.  In addition to the terms defined above and herein,
the term “Registrable Securities”, at any point in time, shall mean the shares
of Common Stock issued and outstanding to the Purchaser hereunder, and all
shares of Common Stock issued or issuable pursuant to Rights issued under Units
purchased hereunder; provided, however, that the foregoing definition shall
exclude in all cases any Registrable Securities sold by a person in a
transaction in which his or her rights under this Agreement are not assigned.
Notwithstanding anything contained herein to the contrary, securities shall
cease to be Registrable Securities when (a) a Registration Statement covering
such Registrable Securities has been declared effective by the Securities and
Exchange Commission and it has been disposed of pursuant to such effective
Registration Statement or (b) such Registrable Securities may be sold pursuant
to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”),
without volume restriction.
 
 
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(b)           Demand Registration.  If the Company shall receive at any time
after the Second Closing Date, a written request from the Purchaser that the
Company file a registration statement under the Securities Act covering the
registration of at least 50% of the Registrable Securities then outstanding,
then the Company shall use its best efforts to file, as soon as practicable, a
registration statement under the Securities Act covering all Registrable
Securities which the Purchaser requests to be registered.  The Company shall
ensure that such registration remains effective for a period of not less than
two years (2) years.
 
(c)           Underwriting. If the Purchaser intends to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 6.  The underwriter will be selected by the Purchaser and shall be
reasonably acceptable to the Company.  In such event, the right of any holder of
Common Stock (each, a “Holder”) to include his own registrable securities (each,
a “Holder’s Registrable Securities”) in such registration shall be conditioned
upon such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Purchaser and such Holder) to the extent
provided herein.  All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such
underwriting.  Notwithstanding the foregoing, if a registration involves an
underwritten offering, and the lead managing underwriter shall advise Company
that the amount of securities to be included in the offering exceeds the amount
which can be sold in the offering, the number of securities owned by Purchaser
to be included in the offering shall be eliminated or reduced as required by the
managing underwriter.
 
(d)           Delay in Filing. Notwithstanding the foregoing, if the Company
shall furnish to Purchaser and the Holders requesting a registration statement
pursuant to this section, a certificate signed by the Chief Executive Officer or
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for the period of time which the Board of
Directors of the Company, in consultation with its legal counsel determine, to
be the shortest period reasonably necessary to avoid such detriment to the
Company, which in any event shall not exceed 120 days following receipt of the
request of the Purchaser.
 
(e)           Limitations. In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 6 after the Company has already effected one (1) registration pursuant
to this Section 6 and such registration has been declared or ordered effective.
 
(f)           Obligations of Company. The Company shall: (i) prepare and file
with the Securities and Exchange Commission such amendments and supplements to
such registration statement as may be necessary to keep such registration
statement effective until the disposition of all securities covered by such
registration statement; (ii) register and qualify the securities covered by such
registration statement under applicable state securities and blue sky laws;
(iii) cause the securities covered by such registration statement to be listed
or quoted on the trading market on which Company’s securities are then listed or
quoted and (iv) take all reasonable actions required to ensure such shares of
Common Stock are DTC eligible.  In addition, the Company shall pay all
registration expenses, filing fees and printing expenses incurred in connection
with any registration statement filed pursuant to Sections 6(b) or 6(h).
 
 
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(g)           Obligations of Purchaser. As a condition to the Company filing the
registration statement, Purchaser shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be required to effect the
registration of such Holder’s Registrable Securities, and such Purchaser shall
represent and warrant that such information provided in connection herewith by
such Purchaser shall be full, accurate and complete.
 
(h)           Piggyback Registration Rights. If, at any time, there is not an
effective registration statement covering the resale all of the Registrable
Securities, and Company shall determine to prepare and file with the Securities
and Exchange Commission (the “Commission”) a registration statement relating to
an offering for its own account or the account of others under the Securities
Act, of any of its equity securities (other than: (i) on Form S-4 (as
promulgated under the Securities Act), (ii) Form S-8 (as promulgated under the
Securities Act), (iii) on Form S-1A with respect to equity securities that have
already been registered under the Securities Act as of the date hereof, or (iv)
the then equivalents of Form S-4 or S-8 relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans), then Company shall send to Purchasers a written notice of such
determination and, if within ten (10) days after receipt by Purchasers of such
notice, Company shall receive a request in writing from Purchasers, Company
shall include in such registration statement all or any part of such Registrable
Securities holders requests to be registered at no cost to Holders (other than
underwriting discounts, fees and commissions).  Notwithstanding the foregoing,
if a registration involves an underwritten offering, and the lead managing
underwriter shall advise Company that the amount of securities to be included in
the offering exceeds the amount which can be sold in the offering, the number of
securities owned by Purchaser to be included in the offering shall be eliminated
or reduced as required by the managing underwriter.  Notwithstanding anything
contained herein to the contrary, securities shall cease to be Registrable
Securities when (a) a Registration Statement covering such Registrable
Securities has been declared effective by the Commission and it has been
disposed of pursuant to such effective Registration Statement or (b) such
Registrable Securities may be sold pursuant to Rule 144 under the Securities Act
without volume restriction.
 
(i)            Indemnification for Registration Statements.  To the extent
permitted by law, the Company will indemnify and hold harmless Purchaser, and
the partners, members, officers and directors of Purchaser, against any losses,
claims, damages, or liabilities to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a “Violation”) by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement or
incorporated by reference therein, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse Purchaser, and/or its partners, members, officers, or
directors for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity contained in this
Section 6(i) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for inclusion in such registration statement by
Purchaser, or its partners, members, officers, or directors, or any other holder
of Common Stock registering its shares in connection with such registration
statement.
 
7.         Adjustments to Purchase Price of and Number of Shares Issuable
pursuant to the Rights.
 
(i)          The number and kind of securities purchasable upon the exercise of
the Rights if any, and the Rights Exercise Price, if any, shall be subject to
adjustment from time to time upon the occurrences and terms set forth
herein.  In case the Company shall (i) pay a dividend in shares of Common Stock
or make a distribution in shares of Common Stock to holders of its outstanding
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, then the number of
shares of Common Stock purchasable upon exercise of the Rights, if any,
immediately prior thereto shall be adjusted so that the Purchaser shall be
entitled to receive the kind and number of shares of Common Stock or other
securities of the Company which it would have owned or have been entitled to
receive had such Rights, if any, been exercised in advance thereof.  Upon each
such adjustment of the kind and number of shares of Common Stock or other
securities of the Company which are purchasable pursuant to exercise of the
Rights, if any, the Purchaser shall thereafter be entitled to purchase the
number of shares of Common Stock or other securities resulting from such
adjustment at a purchase price per share of Common Stock or other security
obtained by multiplying the purchase price in effect immediately prior to such
adjustment by the number of shares of Common Stock purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of shares of
Common Stock or other securities of the Company resulting from such adjustment.
An adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.
 
(ii)          Prior to the exercise of the Rights, if any, in the event that the
Company shall sell any shares of Common Stock to any person or entity other then
pursuant to an Excluded Transaction (as defined below) at a price less than
$0.375 per share (the “Lesser Price”), the Purchaser shall be entitled to
purchase the shares of Common Stock underlying the Rights, as the case may be,
at the Lesser Price.  For the purposes hereof, the term Exempted Transaction
shall mean: (i) the issuance of options and/or restricted stock to employees and
consultants of the Company and approved by the board of directors of the
Company; and (ii) warrants issued to third parties in strategic transactions and
approved by the board of directors of the Company and the affirmative vote of
Chairman Knetzger (to the extent that Mr. Knetzger remains on the Board of
Directors of the Company).
 
 
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8.         Additional Conditions to Closing.
 
(a)           Conditions to Purchaser’s Obligations at the Closing.  Purchaser’s
obligation to purchase the Units is subject to the satisfaction (or waiver by
the Purchaser) of the following conditions:
 
(i)           Expenses; Legal Fees.  On the dates of each of the Unit Closings,
the Company shall be responsible for the following legal and other associated
costs of the Purchaser in connection with this Agreement and the transactions
contemplated hereunder, to be paid from the proceeds upon each respective Unit
Closing: (i) 5% of the gross investment amount as a non accountable due
diligence fee and expense reimbursement payable to Radnor Research & Advisory
Co., LLC, Member NYSE (ii) legal fees of: (A) up to $10,000 for the Initial
Closing; (B) up to $5,000 for the Second Closing; and (C) up to $5,000 for the
Third Closing.  Subject to the foregoing clause, each of the parties shall be
responsible for their own legal and other associated costs of this transaction.
 
(ii)          Financial Advisory Agreement.  On or prior to the Final Initial
Closing Date, the Company shall have entered into a Financial Advisory Agreement
with The Fund LLC pursuant to which The Fund LLC shall provide services related
to financial advice, mergers and acquisitions, capital formation and corporate
finance, business advisory and related matters to the Company.
 
(b)           Conditions to Obligations of the Company.  The Company’s
obligation to issue and sell the Units at each Initial Closing Date is subject
to the satisfaction, on or prior to the Closing, of the following conditions:
 
(i)           Waiver and Release.                                           A
Waiver and Release in a form reasonably acceptable to the Company shall have
been received from Radnor Research with regard to the waiver of any brokerage or
other fees in connection or related to or arising from this Agreement.
 
9.         Miscellaneous.
 
(a)           Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.  The Purchaser shall be entitled to assign any
rights it may have under this Agreement by providing written notice to the
Company. The Purchaser shall provide any information regarding any assignee
reasonably requested by the Company.
 
(b)           Governing Law.  This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Florida, without giving effect to principles of conflicts of law.  Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in Palm Beach
County, Florida.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Palm Beach County,
Florida for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.   If either party shall commence an action
or proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys' fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
 
 
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(c)           Counterparts.  This Agreement may be executed in two or more
counter­parts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
 
(d)           Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
 
(e)           Notices.  Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service, or 48 hours after being
deposited in the U.S. mail as certified or registered mail with postage prepaid
and return receipt requested, if such notice is addressed to the party to be
notified at such party’s address as set forth below or as subsequently modified
by written notice.
 
(f)           Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
 
(g)           Amendments and Waivers.  Any term of this Agreement may be amended
or waived only with the written consent of the Company and the Purchaser. Any
amendment or waiver effected in accordance with this Section 9(g) shall be
binding upon Purchaser and each transferee of the Securities, each future holder
of all such Securities, and the Company.
 
 
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(h)           Severability.  If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable.  In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
 
(i)            Entire Agreement.  This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
 
(j)            Survival of Representations, Warranties and Covenants. The
representations and warranties contained in Sections 2 hereof shall survive
until such time as the date on which all the Securities, if any, have been
exercised in full or expired.
 
(k)           Exculpation Among Purchasers.  Purchaser acknowledges that it is
not relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company.
 
[Signature Pages Follow]

 
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EXECUTION COPY

The parties have executed this Unit Purchase Agreement as of the date first
written above.
 

   
COMPANY:
         
BONDS.COM GROUP, INC.
         
By:
/s/
     
Name:
     
Title:
       

   
Address:
               
Facsimile Number:
               
PURCHASER:
         
FUND HOLDINGS LLC
     

   
By:
/s/
     
Name:
     
Title:
       

   
Address:
               
Facsimile Number:

SIGNATURE PAGE TO UNIT PURCHASE AGREEMENT
 
 

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EXECUTION COPY

 
Exhibits

Exhibit A                           Accredited Investor and FINRA Questionnaire

 
 

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Exhibit A
 
Accredited Investor and FINRA Questionnaire
 

 
 

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BONDS.COM GROUP, INC.
INVESTOR SUITABILITY QUESTIONNAIRE

The following is an investor questionnaire to be completed by the Purchaser to
qualify the Purchaser as a suitable investor in the Corporation under the
Federal and state securities and blue-sky law.

1.           Accredited Investor Certification.  The Purchaser represents and
warrants that he comes within one category marked below, and that for any
category marked, he has truthfully set forth, where applicable, the factual
basis or reason the Purchaser comes within that category.  ALL INFORMATION IN
RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDEN­TIAL.  The undersigned
agrees to furnish any additional information which the Corporation deems
necessary in order to verify the answers set forth below.
 
 
Category A _____
The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000.

 
Explanation: In calculating net worth you may include equity in personal
property and real estate, including your principal residence, cash, short-term
investments, stock and securities.  Equity in personal property and real estate
should be based on the fair market value of such property less debt secured by
such property.
 
Category B _____
The undersigned is an individual (not a partnership, corporation, etc.) who had
an income in excess of $200,000 in each of the two most recent years, or joint
income with his or her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year.

 
Category C _____
The undersigned is a director or executive officer of the Corporation.

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

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

 
__________________
 
__________________
 
(describe entity)
 
 
 

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

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

 
Category H _____
The undersigned is an entity all the equity owners of which are "accredited
investors" (as such term is defined in Rule 501(a) as promulgated under the
Securities Act of 1933, as amended (the "Securities Act")) within one or more of
the above categories.  If relying upon this Category alone, each equity owner
must complete a separate copy of this Agreement.

 
__________________
 
__________________
 
(describe entity)
 
Category I _____
The undersigned is not within any of the categories above and is therefore not
an "accredited investor".

2.           Manner In Which Title To Be Held. (circle one)
 
(a)
Individual Ownership

(b)
Community Property

(c)
Joint Tenant with Right of Survivorship (both parties must sign)

(d)
Partnership

(e)
Tenants in Common

(f)
Company

(g)
Trust

(h)
Other

 
 

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__________________________________
   Signature
 
 
__________________________________
   Signature (if purchasing jointly)
 
 
__________________________________
   Name (Typed or Printed)
 
 
__________________________________
   Name (Typed or Printed)
 
 
__________________________________
Residence (Typed or Printed)
 
 
__________________________________
Residence (Typed or Printed)
 
 
__________________________________
City, State and Zip Code
 
 
__________________________________
City, State and Zip Code
 
 
__________________________________
Tax Identification or Social Security Number
 
 
__________________________________
Tax Identification or Social Security Number
 
Telephone No.:
Business __________________________________
Home ____________________________________
 
 
Telephone No.:
Business __________________________________
Home ____________________________________
 
Name in which securities should be issued:
______________________________________________________
 
 
Dated: ____________
 
Dated: ____________
 

 
 

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FINRA QUESTIONNAIRE
DEFINITIONS FOR FINRA QUESTIONNAIRE
 
Member of the FINRA:
 
A "Member of the FINRA" is any broker or dealer admitted to membership in the
FINRA.
Affiliate:
An Affiliate of any person (for purposes hereof a "person" includes a
partnership, corporation or other legal entity such as a trust or estate) is a
person which controls, is controlled by or is under common control with such
person.  For purposes of this definition:
 
(i)     a person should be presumed to control a Member of the FINRA if the
person beneficially owns 10% or more of the outstanding voting securities of a
Member of the FINRA which is a corporation, or beneficially owns a partnership
interest in 10% or more of the distributable profits or losses of a Member of
the FINRA which is a partnership;
 
(ii)    a Member of the FINRA should be presumed to control a person if the
Member of the FINRA and Persons Associated with a Member of the FINRA
beneficially own 10% or more of the outstanding voting securities of a person
which is a corporation, or beneficially own a partnership interest in 10% or
more of the distributable profits or losses of a person which is a partnership;
and
 
(iii)   a person should be presumed to be under common control with a Member of
the FINRA if:
 
(1)     the same person controls both the Member of the FINRA and such person by
beneficially owning 10% or more of the outstanding voting securities of the
Member of the FINRA and other such person which is a corporation, or by
beneficially owning a partnership interest in 10% or more of the distributable
profits or losses of the Member of the FINRA and other such person which is a
partnership; or
 
(2)     a person having the power to direct or cause the direction of the
management or policies of the Member of the FINRA also has the power to direct
or cause the direction of the management or policies of the other entity in
question.
 
Immediate Family:
The "Immediate Family" of any person, including an employee of or Person
Associated with a Member of the FINRA, includes the parents, mother-in-law,
father-in-law, husband or wife, brother or sister, brother-in-law or
sister-in-law, son-in-law or daughter-in-law, and children of such person or any
other individual who is supported, directly or indirectly, to a material extent
by such person.
 
FINRA:
The Financial Industry Regulatory Authority
 
Person
Associated
with a Member
of the FINRA:
 
A "Person Associated with a Member of the FINRA" is every sole proprietor,
partner, officer, director or branch manager of any Member of the FINRA, or any
natural person occupying a similar status or performing similar functions, or
any natural person engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by such Member of the FINRA
(for example, any employee, Registered Representative or Registered Principal),
whether or not any such person is registered or exempt from registration with
the FINRA.

 

 
 
 

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FINRA QUESTIONNAIRE

1.           State whether you or any of your Affiliates or any members of your
Immediate Family are
(a)           a Member of the FINRA;
¨
Yes
¨
No

 
(b)           an Affiliate of a Member of the FINRA; or
¨
Yes
¨
No

 
(c)           a Person Associated with a Member of the FINRA.
 
¨
Yes
¨
No

 
2.           State whether you or any of your Affiliates own stock or other
securities of any Member of the FINRA or an Affiliate of a Member of the FINRA
or of Bonds.com Group, Inc.
¨
Yes
¨
No

 
3.           State whether you or any of your Affiliates have made a
subordinated loan to any Member of the FINRA.
¨
Yes
¨
No

 
4.           If you marked "Yes" to any of the questions above, please briefly
describe the facts below, giving the names of the Members of the FINRA to which
your answer refers (including, for example, percentage of ownership, amount of
loan and interest payable, applicable dates, names of Affiliates, immediate
family, etc.).
___________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________

5.           State whether you are an Immediate Family Member of a partner of
Rele & Becker, LLC, counsel to Bonds.com Group, Inc.
¨
Yes
¨
No

 

6.           (a)           State (i) whether you provide any consulting or other
services to, or have had any position, office or material relationship within
the past three years with, the Company or its subsidiaries, (ii) if you are the
beneficial owner of any other securities of the Company, or (iii) if you have
made or are aware of any arrangements relating to the distribution of securities
of the Company pursuant to the Registration Statement.
¨
Yes
¨
No

 

If you marked "Yes", please briefly describe (i) such services or relationships,
including cash and non-cash compensation received and attach copies of written
agreements or correspondence describing such services or relationships, (ii) the
nature and amount of any such ownership of Company securities, and/or (iii) any
such securities distribution arrangements.
___________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________

 
 

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7.           State whether you have any oral and/or written agreements with any
Member of the FINRA or Person Associated with a Member of the FINRA concerning
the disposition of your securities of Bonds.com Group, Inc.
¨
Yes
¨
No

  
If you marked "Yes", please briefly describe such agreement and attach copies of
written agreements or correspondence describing such arrangement.
___________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________

8.           State whether you have been granted or have received any selling
concessions, discounts or other allowances in connection with the Company’s
securities
¨
Yes
¨
No

If you marked "Yes", please briefly describe such agreement and attach copies of
written agreements or correspondence describing such arrangement.
___________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________
 
9.           State whether you or any Immediate Family Members is currently, or
has at any time in the past been prohibited or restricted by FINRA (or any of
its predecessor regulatory bodies) from being affiliated or otherwise
participating in the ownership, operation or control of a registered broker
dealer entity
¨
Yes
¨
No

 
If you marked "Yes", please briefly describe such agreement and attach copies of
written agreements or correspondence describing such arrangement.
___________________________________________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________________________________________
 
I hereby affirm that the answers to the above FINRA Questionnaire are true and
correct as of the date set forth below.

Date: __________________, 2009

_____________________________________
Print Name of Investor

_____________________________________
Signature
 
 

 
 
 

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Schedule I
 
 
Existing Convertible Securities
 
 
 
 

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Schedule II

NOTICE OF EXERCISE OF ORDINARY RIGHTS, ADDITIONAL RIGHTS OR SPECIAL RIGHTS

The undersigned hereby irrevocably elects to exercise the following Rights, as
set forth in the Unit Purchase Agreement dated as of __________, 2009, to
purchase an aggregate of ________ shares of the Common Stock of BONDS.COM GROUP,
INC. at an Exercise Price of $__________ per share, for an aggregate price of
$___________ and tenders herewith payment in accordance with Section 1 of said
Purchase Agreement.

For clarity, the undersigned is electing to purchase:

__________  shares underlying the Ordinary Rights

__________ shares underlying the Additional Rights

__________ shares underlying the Special Rights.

Please deliver the stock certificate to:

Dated: ______________________

___________________________
Fund Holdings LLC

By: ________________________