SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of March 31,
2009 between IdeaEdge, Inc. a Colorado corporation (the “Company”), and Gemini
Master Fund, Ltd. (including its successors and assigns, the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (“Securities
Act”), and Regulation D promulgated thereunder, the Company desires to issue and
sell to the Purchaser, and the Purchaser desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:

ARTICLE I.

DEFINITIONS

1.1

Definitions.  In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Note (as defined herein), and (b) the following terms have
the meanings set forth in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Closing” means the closing of the purchase and sale of the Note pursuant to
Section 2.1.

 “Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchaser’s obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Securities, have been
satisfied or waived.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

“Contingent Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of such other Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.

“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.

“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r).

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

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

“Indebtedness” of any Person means (a) all indebtedness for borrowed money, (b)
all obligations issued, undertaken or assumed as the deferred purchase price of
property or services, except for trade payables entered into in the ordinary
course of business, (c) all obligations in respect of letters of credit, surety
bonds, bankers acceptances or similar instruments (including without limitation
all reimbursement or payment obligations with respect thereto), (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including without limitation obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even if the rights
and remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property), (f) all monetary
obligations under any leasing or similar arrangement which is classified as a
“capital lease” under GAAP, and (g) all Contingent Obligations in respect of
Indebtedness of others of the kinds referred to in clauses (a) through (f)
above.

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

“Knowledge” means, when used in reference to the Company, the knowledge of the
directors, corporate officers (including without limitation any individuals
designated as chief financial officer, chief operating officer and similar
designations of the Company) and the general counsel of the Company, assuming
such persons shall have made inquiry that is customary and reasonably
appropriate under the circumstances to which reference is made.

“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.15.

“Note” means the 12% Senior Note issued by the Company to the Purchaser
hereunder, in the form of Exhibit A attached hereto and having an original
Principal Amount of $750,000.00.

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Principal Amount” shall mean $750,000.00.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.6.

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Shares” means the shares of Common Stock issued pursuant hereto.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities” means the Note and the Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Shell Company” means an entity that has (a) no or nominal operations, and (b)
either (i) no or nominal assets, (ii) assets consisting solely of cash and cash
equivalents, or (iii) assets consisting of any amount of cash and cash
equivalents and nominal other assets.

“Subscription Amount” means $705,000 in United States dollars and in immediately
available funds, which is the aggregate amount to be paid for the Note purchased
hereunder by the Purchaser.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable, include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.  In Section 3.1 hereof,
references to the Company shall refer to the Company together with its
Subsidiaries, as applicable.

“Subsidiary Guarantee” means the Subsidiary Guarantee, in the form attached
hereto as Exhibit B, executed by each Subsidiary in favor of the Purchaser,
guaranteeing the Company’s obligations under the Note.

“Trading Day” means a day on which the OTC Bulletin Board is open for trading.

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction Documents” means this Agreement, the Note, the Subsidiary Guarantee
and all exhibits and schedules thereto and hereto and any other documents or
agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means Company’s transfer agent for its Common Stock.

ARTICLE II.

PURCHASE AND SALE

2.1

Closing.  On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and the Purchaser
agrees to purchase, the Note in the principal amount of $750,000.00 and the
Shares referenced in Section 2.4 below for a purchase price equal to the
Subscription Amount.  The Purchaser shall deliver to the Company, via wire
transfer, immediately available funds equal to the Subscription Amount (less the
amount being delivery directly to the Escrow Agent pursuant to the Escrow
Agreement, as such terms are defined in the Note), and the Company shall deliver
the Note to the Purchaser, and the Company and the Purchaser shall deliver the
other items set forth in Section 2.2 deliverable at the Closing.  Upon
satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of Peter J. Weisman, P.C. located at 767 Third
Avenue, 6th Floor, New York, New York 10017, or such other location as the
parties shall mutually agree.

2.2

Deliveries.

(a)

On the Closing Date, the Company shall deliver or cause to be delivered to the
Purchaser the following:

(i)

this Agreement duly executed by the Company;

(ii)

the Note duly executed by the Company with a principal amount equal to the
Principal Amount, registered in the name of the Purchaser; and

(iii)

the Subsidiary Guarantee, duly executed by each Subsidiary of the Company.

(b)

On the Closing Date, the Purchaser shall deliver or cause to be delivered to the
Company the following:

(i)

this Agreement duly executed by the Purchaser; and

(ii)

the Subscription Amount by wire transfer to the account as specified in writing
by the Company (subject to a portion of such amount representing interest being
retained by the Purchaser pursuant to the terms of the Note).

1.2

Closing Conditions.

(a)

The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:

(i)

the accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchaser contained herein;

(ii)

all obligations, covenants and agreements of the Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and

(iii)

the delivery by the Purchaser of the items set forth in Section 2.2(b) of this
Agreement.

(a)

The respective obligations of the Purchaser hereunder in connection with the
Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein;

(ii)

all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

(iii)

the delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

(iv)

there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and

(v)

from the date hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or OTC Bulletin Board, and, at any time
prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, on any national securities exchange or market, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such magnitude in its
effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Purchaser, makes it impracticable
or inadvisable to purchase the Securities at the Closing.

1.2

Stock Issuance.  As additional consideration for the Purchaser purchasing the
Note hereunder and making the loans evidenced thereby, the Company shall issue
400,000 shares (the “Shares”) of Common Stock of the Company to the Purchaser
within 5 Business Days following the Closing.  The Shares issued pursuant to
this paragraph shall be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company.  The provisions of this
paragraph shall be a condition subsequent to the Closing.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

2.1

Representations and Warranties of the Company.  Except as disclosed in the SEC
Reports filed after September 30, 2009 but at least 5 Business Days before the
date hereof and except as set forth under the corresponding section of the
disclosure schedules delivered to the Purchaser concurrently herewith
(“Disclosure Schedules”) which Disclosure Schedules shall be deemed a part
hereof, the Company hereby makes the following representations and warranties to
the Purchaser:

(a)

Subsidiaries.  All of the direct and indirect subsidiaries of the Company are
set forth on Schedule 3.1(a) (whether or not disclosed in SEC Reports).  The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.  All Subsidiaries which are designated as
“inactive” on such schedule do not have any material assets and do not engage in
any operations and shall remain as such unless the Company first notifies the
Purchaser and executes and delivers any guarantee reasonably requested by the
Purchaser.

(b)

Organization and Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
 Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents.  Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s and any Subsidiary’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.  The
Company has furnished to the Purchaser true and correct copies of the Company’s
articles of incorporation and by-laws, as each is currently in effect.

(c)

Authorization; Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals.  Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(d)

No Conflicts.  The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected (except as detailed on Schedule 3.1(d)), or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.

(e)

Filings, Consents and Approvals.  The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Section 4.3, (ii) the notice and/or
application(s) to each applicable Trading Market for the issuance and sale of
the Securities and the listing of the Shares for trading thereon in the time and
manner required thereby, and (iii) the filing of Form D with the Commission and
such filings as are required to be made under applicable state securities laws
(collectively, the “Required Approvals”).

(f)

Issuance of the 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.

(g)

Capitalization.  The capitalization of the Company is as set forth on Schedule
3.1(g) (whether or not disclosed in SEC Reports), which Schedule 3.1(g) shall
also include the number of shares of Common Stock owned beneficially, and of
record, by Affiliates of the Company as of the date hereof. The Company has not
issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion or exercise of Common Stock Equivalents 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 (except as waived by the holder of
such rights as detailed on Schedule 3.1(g)).  There are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents. The issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchaser) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities.  No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities.  There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders (except as
detailed on Schedule 3.1(g)).

(h)

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, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable (to the Company’s knowledge with respect to
applicable Commission interpretations), 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.  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.

(i)

Material Changes.  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 and for operating losses
incurred in the ordinary course of business consistent with past losses, (i)
there has been no event, occurrence or development 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 or
existing agreements disclosed in the SEC Reports (except for the grant of a
warrant to purchase 50,000 common shares at $0.40 each issued to Mark Sandson, a
Company Director, on March 24, 2009).  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, 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 two Trading Days prior to the
date that this representation is made.

(j)

Litigation.  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.  Neither the Company nor any Subsidiary,
nor, to the knowledge of the Company, any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
 There has not been, and to the knowledge of the Company, there is not pending
or contemplated, any investigation by the Commission involving the Company or
any current or former director or officer of the Company.  The Commission has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.  

(k)

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.  No executive officer, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.
 The Company and its Subsidiaries are in compliance with all U.S. federal,
state, local and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(l)

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.

(m)

Regulatory Permits.  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 currently conducted and contemplated to be conducted 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.

(n)

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 Liens,
except for Liens as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.

(o)

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 necessary or material for
use in connection with their respective businesses as currently conducted and
contemplated to be conducted as described in the SEC Reports 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 Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person 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.  The Company has duly and properly
filed or caused to be filed with the United States Patent and Trademark Office
(the “PTO”) and applicable foreign and international patent authorities all
patent applications owned by the Company (the “Company Patent Applications”). To
the knowledge of the Company, the Company has complied with the PTO’s duty of
candor and disclosure for the Company Patent Applications and has made no
material misrepresentation in the Company Patent Applications.  The Company is
not aware of any information material to a determination of patentability
regarding the Company Patent Applications not called to the attention of the PTO
or similar foreign authority.  The Company is not aware of any information not
called to the attention of the PTO or similar foreign authority that would
preclude the grant of a patent for the Company Patent Applications.  The Company
has no knowledge of any information that would preclude the Company from having
clear title to the Company Patent Applications.

(p)

Insurance.  The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged in the reasonable judgment of management of the
Company, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Subscription Amount.  Neither the
Company nor any 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 without a significant increase in cost.

(q)

Transactions with Affiliates and Employees.  None of the officers or directors
of the Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the 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 or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $10,000
other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock
option plan of the Company.

(r)

Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as a small business issuer as of the Closing Date.  The Company
and the 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 GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system will be met.  The design and operation
of a control system must reflect the fact that there are resource limitations
and the benefit of the controls must be considered relative to their costs. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms.  The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s most
recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”).  The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date, there have
been no changes in the Company’s internal control over financial reporting (as
such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

(s)

Certain Fees.  The Purchaser shall have no obligation with respect to any
commission, broker’s fee, finder’s fee or similar fee to any broker, financial
advisor, consultant, finder, placement agent, investment banker, bank or other
Person in connection with or resulting from the Securities Purchase Agreement or
the Transactions by reason of any agreement of or action taken by the Company.  

(t)

Private Placement.  Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Section 3.2, no registration under the Securities Act is
required for the offer and sale of the Securities by the Company to the
Purchaser as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the OTC Bulletin
Board.

(u)

Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.

(v)

Registration Rights.  No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.

(w)

Listing and Maintenance Requirements.  The Common Stock is registered pursuant
to Section 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration.  The Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.

(x)

Application of Takeover Protections.  The Company does not have in place and is
not subject to any anti-takeover provisions (including without limitation
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar agreement or provision)
under the Company’s certificate of incorporation or the laws of its state of
incorporation that is or could become applicable to the Purchaser as a result of
the Purchaser and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Purchaser’s ownership of the
Securities.

(y)

No Inside Information.  Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided
the Purchaser or their agents or counsel with any information that it believes
constitutes or might constitute material, nonpublic information which will not
be either publicly disclosed or no longer constitute material non-public
information on or prior to the date which is three (3) months following the
Closing.  The Company understands and confirms that the Purchaser will rely on
the foregoing representation in effecting transactions in securities of the
Company.

(z)

Disclosure.  All disclosure furnished by or on behalf of the Company to the
Purchaser regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure 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.   The
press releases disseminated by the Company during the twelve months preceding
the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not misleading.  The
Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.

(aa)

No Integrated Offering. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any such
securities under the Securities Act, or (ii) any applicable shareholder approval
provisions of the OTC Bulletin Board or any Trading Market on which any of the
securities of the Company are listed or designated.

(bb)

Solvency.  Based on the consolidated financial condition of the Company as of
the Closing Date after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder, the Company is solvent.  The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt).  The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date.  Schedule 3.1(bb) sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments, in
excess of $25,000 (whether or not disclosed in SEC Reports).

(cc)

Tax Status.  Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

(dd)

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 Purchaser and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.

(ee)

Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

(ff)

Seniority.  As of the Closing Date, no Indebtedness or other claim against the
Company is senior to the Note in right of payment, whether with respect to
interest or upon liquidation or dissolution, or otherwise, other than
indebtedness secured by purchase money security interests (which is senior only
as to underlying assets covered thereby) and capital lease obligations (which is
senior only as to the property covered thereby).

(gg)

No Disagreements with Accountants and Lawyers.  There are no disagreements of
any kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company, and the Company is not aware of any circumstances with
respect to its accountants or lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.

(hh)

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

(ii)

Regulation M Compliance.  The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the securities of the Company during any
restricted period (as defined in Regulation M adopted by the Commission), or
(iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case
of clauses (ii) and (iii), compensation paid to the Company’s placement agents
in connection with the placement of Company securities.

(jj)

No “Shell”.

To the Company’s knowledge, the Company is not a Shell Company.

(kk)

Company Status.  The Company and its Subsidiaries either have a pre-existing
personal or business relationship with the Purchaser or its officers, directors
or controlling persons, or by reason of Company’s and its Subsidiaries’ business
or financial experience, or the business or financial experience of their
professional advisors who are unaffiliated with and who are not compensated by
the Purchaser, directly or indirectly, have the capacity to protect their own
interests in connection with the sale of the Securities.  The principal place of
business of the Company and its Subsidiaries is in the jurisdiction indicated
below the Company’s signature hereto.  The Company is an entity organized in the
State of Colorado and qualified under the laws of the State of California, and
Socialwise, Inc. is an entity organized and qualified under the laws of the
State of California.

2.2

Representations and Warranties of the Purchaser.  The Purchaser hereby
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:

(a)

Organization; Authority.  The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate or similar action on the part of
the Purchaser.  Each Transaction Document to which it is a party has been duly
executed by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

(b)

Own Account. The Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting such Purchaser’s right to sell
the Securities pursuant to any registration statement filed under the Securities
Act or otherwise in compliance with applicable federal and state securities
laws) in violation of the Securities Act or any applicable state securities law.
The Purchaser is acquiring the Securities hereunder in the ordinary course of
its business.

(c)

Purchaser Status. At the time the Purchaser was offered the Securities, it was,
and at the date hereof it is: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act. The Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.  Purchaser either has a pre-existing personal or
business relationship with the Company or its officers, directors or controlling
persons, or by reason of Purchaser’s business or financial experience, or the
business or financial experience of their professional advisors who are
unaffiliated with and who are not compensated by the Company, directly or
indirectly, have the capacity to protect their own interests in connection with
the purchase of the Securities.  The principal place of business of the
Purchaser is in the Cayman Islands.

(d)

Experience of the Purchaser. The Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. The Purchaser is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

(e)

General Solicitation. The 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)

Available Information.  The Purchaser (i) has been provided an opportunity for a
reasonable time prior to the date hereof to obtain additional information
concerning the purchase of the Note (the “Offering”), the Company and all other
information to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense; (ii) has been given the opportunity
for a reasonable time prior to the date hereof to ask questions of, and receive
answers from, the Company or its representatives concerning the terms and
conditions of the Offering and other matters pertaining to an investment in the
Securities, or that which was otherwise provided in order for them to evaluate
the merits and risks of a purchase of the Securities to the extent the Company
possesses such information or can acquire it without unreasonable effort or
expense; and (iii) has determined that the Securities are a suitable investment
for such Purchaser.

ARTICLE III.

OTHER AGREEMENTS OF THE PARTIES

3.1

Transfer Restrictions.

(a)

The Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of the Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
to an Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may, if reasonable, 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 and shall have the rights of
the Purchaser under this Agreement.

(b)

The Purchaser agrees to the imprinting, so long as is required by this Section
4.1, of a legend on any of the certificates for Common Shares in the following
or similar form:

THIS SECURITY 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.

The Company acknowledges and agrees that the Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, the Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties.  Such a pledge
or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith.  Further, no notice shall be required of such pledge.  At
the Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities.

(c)

Certificates evidencing the Shares shall not contain any legend (including the
legend set forth in Section 4.1(b) hereof): (i) while a registration statement
covering the resale of such security is effective under the Securities Act, or
(ii) if such Shares are eligible for resale under Rule 144, or (iii) 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 4.1(c), it will, no later than three Trading
Days following the delivery by the Purchaser to the Company or the Transfer
Agent of a certificate representing the Shares, as applicable, issued with a
restrictive legend, together with any reasonably required certifications to
document compliance with Rule 144 (including a legal opinion if necessary) and
any required documentation in the event such certificate is to be delivered in
the name of a Person other than the record holder of such Shares (such third
Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to the
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 Transfer Agent that enlarge the restrictions
on transfer set forth in this Section.  Certificates for Shares subject to
legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by the Purchaser, or if the Company
is not a participant in DTC’s DWAC program, then by other available means,
provided that the Company shall use its best efforts to participate in such DWAC
program.

3.2

Furnishing of Information.  Until the earliest of the time that the Purchaser no
longer owns the Shares, 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 the Purchaser owns the Shares, if
the Company is not required to file reports pursuant to the Exchange Act, it
will prepare and furnish to the Purchaser and make publicly available in
accordance with Rule 144(c) such information as is required for the Purchaser to
sell the Shares under Rule 144.  The Company further covenants that it will take
such further action as the Purchaser may reasonably request, to the extent
required from time to time to enable the Purchaser to sell the Shares without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.  So long as any Shares are outstanding, the Company shall
cause itself to be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act and timely file all reports required to be filed thereunder.
 

3.3

Securities Laws Disclosure; Publicity.  The Company shall, within four (4)
Trading Days following the date hereof, issue a Current Report on Form 8-K
disclosing the material terms of the transactions contemplated hereby and
attaching the Transaction Documents as exhibits thereto.  The Company and the
Purchaser shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor the
Purchaser shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of the Purchaser, or without the prior consent of the Purchaser, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.

3.4

Non-Public Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information.  The Company understands and
confirms that the Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

3.5

Use of Proceeds.  The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and shall not use such
proceeds for (a) the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the Company’s business
and prior practices), (b) the redemption of any Common Stock or Common Stock
Equivalents, (c) the settlement of any outstanding litigation, or (d) making any
investments in securities or otherwise purchasing any equity or debt securities,
including without limitation purchasing any corporate, governmental, municipal
or auction-rate bonds or other debts instruments (whether at auction, in the
open market or otherwise), any commercial or chattel paper, or any certificates
of deposit, or investing in any money market or mutual funds.

3.6

Indemnification of the Purchaser.   Subject to the provisions of this Section
4.6, the Company will indemnify and hold the Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
Party in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company with respect to any of the transactions contemplated
by the Transaction Documents (except to the extent such action is based upon a
breach of the Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings the Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, the Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel.  The
Company will not be liable to any Purchaser Party under this Agreement (A) for
any settlement by such Purchaser Party effected without the Company’s prior
written consent, which shall not be unreasonably withheld or delayed, or (B) to
the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by the Purchaser Party in this
Agreement or in the other Transaction Documents.

3.7

Additional Guarantors.   The Company shall cause each of its Subsidiaries formed
or acquired on or after the date hereof to execute and deliver to the Purchaser
a Subsidiary Guarantee in conformity with the one executed and delivered at
Closing.

3.8

Operation of Business. So long as the Note remains outstanding, the Company
(together with its Subsidiaries) shall:

(a)

Insurance.  Maintain in full force and effect insurance reasonably believed by
the Company to be adequate coverage (a) on all assets and activities, covering
property loss or damage and loss of income by fire or other hazards or casualty,
and (b) against all liabilities, claims and risks for which it is customary for
companies similarly situated to the Company to insure, including without
limitation applicable product liability insurance, required workmen’s
compensation insurance, and other insurance covering injury or damage to persons
or property.  The Company shall promptly furnish or cause to be furnished
evidence of such insurance to the Purchaser upon request, in form and substance
reasonably satisfactory to the Purchaser.

(b)

Information on Adverse Changes.  If requested by the Purchaser (and provided the
Purchaser executes a non-disclosure agreement with the Company which includes a
covenant by the purchaser that it will not trade in the Company’s securities),
promptly inform the Purchaser of (i) all material adverse changes in the
Company’s financial condition, (ii) all litigation and claims and threatened
litigation and claims against the Company or its Subsidiaries, and (iii) any
event, occurrence or other matter which has had or could be reasonably expected
to result in a Materially Adverse Effect.

(c)

Books and Records.   Maintain its books and records in accordance with GAAP
applied on a consistent basis and permit the Purchaser to examine and audit such
books and records at reasonable times upon reasonable notice.

(d)

Operations.  Substantially maintain its present executive and management
personnel, and conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable foreign, federal, state and municipal
laws, ordinances, rules and regulations with respect to its properties,
charters, businesses and operations except where any such non-compliance would
not reasonably be expected to result in a Material Adverse Effect. Without the
prior written consent of the Purchaser, the Company shall not (i) engage in any
business activities substantially different than those in which the Company is
presently engaged, (ii) cease operations, liquidate, merge or consolidate with
any other entity, (iii) pay any dividends on or purchase outstanding shares of
capital stock or equity of the Company or its Subsidiaries, or (iv) sell,
transfer or dispose of (A) all or substantially all of the Company’s assets on a
consolidated basis or (B) any of the Company’s or its Subsidiaries’ material
assets.

3.9

Listing of Shares.  The Company shall apply for, to the extent necessary, and
cause all Shares to be listed, quoted and traded on the OTC Bulletin Board
promptly following the Closing Date.  The Company shall (i) if applicable, in
the time and manner required by the OTC Bulletin Board, prepare and file with
such market an additional shares listing application covering a number of shares
of Common Stock at least equal to the number of Shares, (ii) if applicable, take
all steps necessary to cause such shares of Common Stock to be approved for
listing on such market as soon as possible thereafter, (iii) if applicable,
provide to the Purchaser evidence of such listing, and (iv) maintain the listing
or quoting of the Company’s Common Stock on the OTC Bulletin Board or another
Trading Market so long as the Purchaser holds the Shares.  

3.10

Form D; Blue Sky Filings.  If required, the Company agrees to timely file a Form
D with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of the Purchaser. 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 the Purchaser
at the Closing under applicable securities or “Blue Sky” laws of the states of
the United States, and shall provide evidence of such actions promptly upon
request of the Purchaser.

3.11

Piggy-Back Registration.  Except with respect to the Company’s currently filed
Form S-1 registration statement which is not effective as of the date hereof, if
the Company shall determine to prepare and file with the Commission a
registration statement, at any time within six (6) months following the Closing
Date, 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 on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or its then equivalents
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 the Company
shall send to the Purchaser written notice of such determination and, if within
seven (7) Business Days after receipt of such notice, the Purchaser shall so
request in writing (which request shall specify the Shares intended to be
disposed of by the Purchaser), the Company will cause the registration under the
Securities Act of all Shares which the Company has been so requested to register
by the Purchaser, to the extent required to permit the disposition of the Shares
so to be registered.  The Company shall include in such registration statement
all or any part of such Shares the Purchaser requests to be registered;
provided, however, that the Company shall not be required to register any Shares
pursuant to this Section that are eligible for sale pursuant to Rule 144 of the
Securities Act.  In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Shares in such registration statement, then if the Company after
consultation with the managing underwriter should reasonably determine that the
inclusion of such Shares would materially adversely affect the offering
contemplated in such registration statement, and based on such determination
recommends inclusion in such registration statement of fewer or none of the
Shares of the Purchasers, then (x) the number of Underlying Shares of the
Purchaser included in such registration statement shall be reduced as reasonably
determined by such underwriter.  The Company shall keep such Registration
Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when all the Shares covered by such Registration
Statement have been sold or (y) the date on which all the Shares may be sold
without any restriction pursuant to Rule 144 as determined by the counsel to the
Company pursuant to a written opinion letter, addressed to the Company's
transfer agent to such effect.  In connection with any registration of the
Shares pursuant to this Section, the Company and the Purchaser shall enter into
a registration rights agreement containing customary and reasonable provisions
regarding the registration of securities.

3.12

Additional Registration.  Without limiting any other remedies available to the
Purchaser hereunder, at law, in equity or otherwise, in the event that after the
date which is six months following the Closing Date the Purchaser is unable to
sell the Shares pursuant to Rule 144 due to actions for which the Company is
directly responsible (including without limitation 1) due to a determination
that the Company is or has at any time previously been (or may have been) a
Shell Company and as such counsel to the Company and/or Purchaser will not issue
a legal opinion to the Transfer Agent that it may deliver un-legended freely
tradable Shares to the Purchaser under Rule 144 or 2) the Company fails
to comply in all respects with its reporting and filing obligations under the
1934 Act), then the Company shall (a) within 30 days following demand by the
Purchaser, prepare and file with the Commission a registration statement
registering the resale by the Purchaser of all the Shares under the Securities
Act, and (b) undertake commercially reasonable efforts to cause such
registration statement to be declared effective by the Commission as promptly as
possible thereafter (but no later than 90 days after such filing) and remain
effective until all such Shares have been sold.  In connection with any
registration of Shares pursuant to this Section, promptly following any demand
or request by the Purchaser hereunder, the Company and the Purchaser shall enter
into a registration rights agreement containing customary and reasonable
provisions regarding the registration of securities (including reasonable
liquidated damages provisions).

ARTICLE IV.

MISCELLANEOUS

4.1

Termination.  This Agreement may be terminated by the Purchaser by written
notice to the Company if the Closing has not been consummated on or before the
date which is five (5) days following the date hereof; provided, however, that
such termination will not affect the right of any party to sue for any breach by
the other party.

4.2

Entire Agreement.  The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

4.3

Notices.  Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto, or email to the email address set forth in
the signature pages attached hereto, prior to 5:30 p.m. (New York City time) on
a Trading Day, with electronic confirmation of such delivery, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto, or email to the email address set forth in the signature pages
attached hereto, on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, with electronic confirmation of such
delivery, (c) the second Business Day following the date of mailing, if sent by
regular mail, or  the date on which such notice or communication is deposited
with a nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given.  The address,
fax number and email address for such notices and communications shall be as set
forth on the signature pages attached hereto.

4.4

Amendments; Waivers.  No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchaser, or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought.  No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right.

4.5

Headings.  The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

4.6

Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns.  The Company
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchaser (other than by merger).  The Purchaser
may assign any or all of its rights under this Agreement to any Person to whom
the Purchaser assigns or transfers the Note, provided that such transferee
agrees in writing to be bound, with respect to the Note, by the provisions of
the Transaction Documents that apply to the “Purchaser.”

4.7

No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.6.

4.8

Governing Law.  All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and
construed and enforced in accordance with the internal laws of the State of
California, without regard to the principles of conflicts of law thereof.  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)
may be commenced in the state and federal courts sitting in the San Diego,
California.  Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the San Diego,
California 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
reasonable costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

4.9

Survival.  The representations and warranties shall survive the Closing and the
delivery of the Securities for the applicable statute of limitations.

4.10

Execution.  This Agreement may be executed in two or more counterparts, all of
which when taken together 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, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” or other document image
format data file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf” or other document image
format data file signature page were an original thereof.

4.11

Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.  It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

4.12

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.

4.13

Remedies.  In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchaser and the
Company will be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agrees to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.  

4.14

Payment Set Aside. To the extent that the Company makes a payment or payments to
the Purchaser pursuant to any Transaction Document or the Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

4.15

Usury.  The Company hereby agrees not to insist upon or plead or in any manner
whatsoever claim, and will resist any and all efforts to be compelled to take
the benefit or advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any claim, action or proceeding that may
be brought by the Purchaser in order to enforce any right or remedy under any
Transaction Document.  Notwithstanding any provision to the contrary contained
in any Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate.  It
is agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless such
application is precluded by applicable law.  If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to the
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by the Purchaser to the unpaid principal balance of
any such indebtedness or be refunded to the Company, the manner of handling such
excess to be at the Purchaser’s election.

4.16

Saturdays, Sundays, Holidays, etc.

If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall not be a Business Day, then such
action may be taken or such right may be exercised on the next succeeding
Business Day.

4.17

Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

4.18

Waiver of Jury Trial.  In any action, suit or proceeding in any jurisdiction
brought by any party against any other party, the parties each knowingly and
intentionally, to the greatest extent permitted by applicable law, hereby
absolutely, unconditionally, irrevocably and expressly waives forever trial by
jury.

(Signature Page Follows)

SPA -- IDAE v.5

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

IDEAEDGE, INC.

By: /s/ James P. Collas

Name:  James P. Collas

Title:    President

 

By: /s/ Jonathan Shultz

Name:  Jonathan Shultz

Title:    Chief Financial Officer

 

Address for Notice:

6440 Lusk Blvd., Suite 200

San Diego, CA 92121

 

Email: jshultz@ideaedge.com

Attn: Jonathan Shultz, CFO

 

GEMINI MASTER FUND, LTD.

By:

GEMINI STRATEGIES, LLC, as investment manager

By: /s/ Steven Winters

Name:

Steven Winters

Title:

President

Address for Notice:

c/o Gemini Strategies, LLC

with copy to:
135 Liverpool Drive, Suite C

Peter J. Weisman, P.C.

 Cardiff, CA  92007

767 Third Avenue, 6th Floor

Attn:  Steven Winters

New York, NY  10017

Fax: (858) 509-8808

Fax: (212) 676-5665

Email:  steve@geministrategies.com

Email:  pweisman@pweisman.com

Subscription Amount:    $705,000.00

Principal Amount:

    $750,000.00

2

SPA -- IDAE v.5