Exhibit 10.8
 
NOTE AND WARRANT PURCHASE AGREEMENT

THIS NOTE AND WARRANT PURCHASE AGREEMENT, dated as of September 17, 2010 (this
“Agreement”), is entered into by and between WORLD SERIES OF GOLF, INC., a
Nevada corporation (the “Company”), and INTER-MOUNTAIN CAPITAL CORP., a Delaware
corporation, its successors or assigns (the “Buyer”).

W I T N E S S E T H:

WHEREAS, the Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration for offers and sales
to accredited investors afforded, inter alia, under Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the
“SEC”) under the Securities Act of 1933, as amended (the “1933 Act”), and/or
Section 4(2) of the 1933 Act; and

WHEREAS, the Buyer wishes to acquire from the Company, and the Company desires
to issue and sell to the Buyer, the Warrant (as defined below) and the Notes (as
defined below), which Notes will be convertible into shares of Common Stock of
the Company, par value $0.001 per share (the “Common Stock”), upon the terms and
subject to the conditions of the Notes, the Warrant, this Agreement and the
other Transaction Documents (as defined below).

NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           CERTAIN DEFINITIONS. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:

“Affiliate” means, with respect to a specific Person referred to in the relevant
provision, another Person who or which controls or is controlled by or is under
common control with such specified Person.

“Buyer’s Counsel” means Bennett Tueller Johnson & Deere, P.C.

“Buyer Control Person” means each manager, executive officer, promoter, and such
other Persons as may be deemed in control of the Buyer pursuant to Rule 405
under the 1933 Act or Section 20 of the 1934 Act (as defined below).

“Certificate of Incorporation” means the certificate of incorporation, articles
of incorporation or other charter document (howsoever denominated) of the
Company, as amended to date.

“Closing Date” means the date of the closing of the purchase and sale of the
Notes and the Warrant.

 “Company Control Person” means each director, executive officer, promoter, and
such other Persons as may be deemed in control of the Company pursuant to Rule
405 under the 1933 Act or Section 20 of the 1934 Act.

“Company Counsel” means Gracin & Marlow, LLP.

“Company’s SEC Documents” means the Company’s filings on the SEC’s EDGAR system.
 
 
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“Conversion Date” means the date a Holder submits a Notice of Conversion, as
provided in the Notes.

“Conversion Shares” means the shares of Common Stock issuable upon conversion of
the Notes and/or in payment of accrued interest, as contemplated in the Notes.

“Delivery Date” has the meaning ascribed to it, as may be relevant in the Notes
(with respect to Conversion Shares) or the Warrant (with respect to Warrant
Shares).

“Holder” means the Person holding the relevant Securities at the relevant time.

“Last Audited Date” means March 31, 2010.

“Material Adverse Effect” means an event or combination of events, which
individually or in the aggregate, would reasonably be expected to (x) adversely
affect the legality, validity or enforceability of the Notes, the Warrant or any
of the Transaction Documents, (y)  have or result in a material adverse effect
on the results of operations, assets, or financial condition of the Company and
its subsidiaries, taken as a whole, or (z) adversely impair the Company’s
ability to perform fully on a timely basis its material obligations under any of
the Transaction Documents or the transactions contemplated thereby.

“Maturity Date” has the meaning ascribed to it in the Notes.

“Person” means any living person or any entity, such as, but not necessarily
limited to, a corporation, partnership or trust.

“Principal Trading Market” means (a) NYSE Amex, (b) the New York Stock Exchange,
(c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, (e) the Nasdaq OTC
Bulletin Board, or (f) such other market on which the Common Stock is
principally traded at the relevant time, but shall not include the “pink
sheets.”

 “Rule 144” means (i) Rule 144 promulgated under the 1933 Act or (ii) any other
similar rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration under the 1933
Act.

“Securities” means the Notes, the Warrant and the Shares.

“Shares” means the shares of Common Stock representing any or all of the
Conversion Shares and the Warrant Shares.

“State of Incorporation” means Nevada.

“Subsidiary” means, as of the relevant date, any subsidiary of the Company
(whether or not included in the Company’s SEC Documents) whether now existing or
hereafter acquired or created.

“Trading Day” means any day during which the Principal Trading Market shall be
open for business.

“Transaction Documents” means this Agreement, the Notes, the Security Agreement
(defined below), each of the Buyer Trust Deed Notes (defined below), the Trust
Deed (defined below), the Request (defined below), the Escrow Agreement (defined
below), the Transfer Agent Letter (defined below), the Warrant, and all other
certificates, documents, agreements, resolutions and instruments delivered to
any party under or in connection with this Agreement.
 
 
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“Transfer Agent” means, at any time, the transfer agent for the Company’s Common
Stock.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrant.

“Wire Instructions” means the wire instructions for the Initial Cash Purchase
Price (as defined hereafter), as provided by the Company, set forth on Annex I.

2.           AGREEMENT TO PURCHASE; PURCHASE PRICE.

a.           Purchase.

(i) Subject to the terms and conditions of this Agreement and the other
Transaction Documents, the undersigned Buyer hereby agrees to purchase from the
Company seven Secured Convertible Promissory Notes with an aggregate principal
amount of $1,446,500.00 substantially in the forms attached hereto as Annex II
(respectively, “Note #1,” “Note #2,” etc., and collectively, the “Notes”). The
Notes shall be secured by a Security Agreement substantially in the form
attached hereto as Annex III listing each of the Buyer Trust Deed Notes as
security for the Company’s obligations under the Transaction Documents (the
“Security Agreement”). In consideration thereof, Buyer shall (i) pay the
principal amount set forth on the Buyer’s signature page of this Agreement (the
“Initial Cash Purchase Price”) and (ii) issue to the Company the Buyer Trust
Deed Notes (the sum of the initial principal amounts of the Buyer Trust Deed
Notes, together with the Initial Cash Purchase Price, the “Purchase Price”),
which Buyer Trust Deed Notes shall be secured by a Trust Deed substantially in
the form attached hereto as Annex IV (the “Trust Deed”).  The Initial Cash
Purchase Price shall be paid in accordance with the Wire Instructions.

(ii)           In consideration for the Purchase Price, the Company will also
issue to the Buyer a warrant in the form attached hereto as Annex V (the
“Warrant”).

(iii)           The Company shall also execute and deliver to the Buyer a
Request for Full Reconveyance (the “Request”) substantially in the form attached
hereto as Annex VI.

(iv)           The Request shall be held in escrow in accordance with the terms
of the Escrow Agreement substantially in the form attached hereto as Annex VII
(the “Escrow Agreement”).
 
 
(v)           The Company shall also execute and deliver to the Transfer Agent,
and the Transfer Agent shall execute to indicate its acceptance thereof, the
irrevocable transfer agent instruction letter substantially in the form attached
hereto as Annex VIII (the “Transfer Agent Letter”).

(vi)           At the Closing, the Buyer shall deliver to the Company the
following:

(1)           The Initial Cash Purchase Price;

(2)           A Buyer Trust Deed Note in the principal amount of $200,000.00
substantially in the form attached hereto as Annex IX (“Buyer Trust Deed Note
#1”);

(3)           A Buyer Trust Deed Note in the principal amount of $200,000.00
substantially in the form attached hereto as Annex X (“Buyer Trust Deed Note
#2”);

(4)           A Buyer Trust Deed Note in the principal amount of $200,000.00
substantially in the form attached hereto as Annex XI (“Buyer Trust Deed Note
#3”);
 
 
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(5)           A Buyer Trust Deed Note in the principal amount of $200,000.00
substantially in the form attached hereto as Annex XII (“Buyer Trust Deed Note
#4”);

(6)           A Buyer Trust Deed Note in the principal amount of $200,000.00
substantially in the form attached hereto as Annex XIII (“Buyer Trust Deed Note
#5”);

(7)           A Buyer Trust Deed Note in the principal amount of $200,000.00
substantially in the form attached hereto as Annex XIV (“Buyer Trust Deed Note
#6,” and together with Buyer Trust Deed Note #1, Buyer Trust Deed Note #2, Buyer
Trust Deed Note #3, Buyer Trust Deed Note #4 and Buyer Trust Deed Note #5, the
“Buyer Trust Deed Notes”); and

(8)           The Trust Deed.

(vii)           The tender of the Initial Cash Purchase Price and the issuance
and sale of the Notes and the Warrant to the Buyer are sometimes referred to
herein and in the other Transaction Documents as the purchase and sale of the
Notes and Warrant.

b.           Form of Payment; Delivery of Notes and Warrant. The sale and
purchase of the Notes and the Warrant shall take place at a closing (the
“Closing”) to be held at the offices of the Buyer on the Closing Date.  At the
Closing, the Company will deliver to the Buyer the Transaction Documents against
receipt by the Company of the Initial Cash Purchase Price and the Buyer Trust
Deed Notes.

c.           Initial Cash Purchase Price. The Notes carry an original issue
discount totaling, on an aggregate basis, $131,500.00 (the “OID”).  In addition,
the Company agrees to pay $15,000.00 to the Buyer to cover the Buyer’s legal
fees, accounting costs, due diligence, monitoring and other transaction costs
incurred in connection with the purchase and sale of the Securities (the
“Transaction Expenses”).  The Transaction Expenses shall be added to the initial
principal balance of Note #1.  The Initial Cash Purchase Price, therefore, shall
be $100,000.00, computed as follows: $1,446,500.00 less the OID less the
Transaction Expenses less the sum of initial principal amounts of the Buyer
Trust Deed Notes.

3.           BUYER REPRESENTATIONS AND WARRANTIES.

The Buyer represents and warrants to, and covenants and agrees with, the
Company, as of the date hereof and as of the Closing Date, as follows:

a.           Binding Obligation. The Transaction Documents to which the Buyer is
a party, and the transactions contemplated hereby and thereby, have been duly
and validly authorized by the Buyer.  This Agreement has been executed and
delivered by the Buyer, and this Agreement is, and each of the other Transaction
Documents to which the Buyer is a party, when executed and delivered by the
Buyer (if necessary), will be valid and binding obligations of the Buyer
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors’ rights
generally.

b.           Accredited Investor Status. The Buyer is an “accredited investor”
as that term is defined in Rule 501 of the General Rules and Regulations under
the 1933 Act.

4.           COMPANY REPRESENTATIONS AND WARRANTIES.   The Company represents
and warrants to the Buyer as of the date hereof and as of the Closing Date that:

a.           Rights of Others Affecting the Transactions.  There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Securities.  No other party has a currently exercisable right of first refusal
which would be applicable to any or all of the transactions contemplated by the
Transaction Documents.
 
 
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b.           Status.  The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation and
has the requisite corporate power to own its properties and to carry on its
business as now being conducted.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect.  The Company
has registered its stock under Section 12(g) of the Securities Exchange Act of
1934, as amended (the “1934 Act”), and is obligated to file reports pursuant to
Section 13 or Section 15(d) of the 1934 Act.   The Company has taken no action
designed to terminate, or which to its knowledge is likely to have the effect
of, terminating the registration of the Common Stock under the 1934 Act, nor has
the Company received any notification that the SEC is contemplating terminating
such registration.  The Common Stock is quoted on the Principal Trading
Market.  The Company has received no notice, either oral or written, with
respect to the continued eligibility of the Common Stock for quotation on the
Principal Trading Market, and the Company has maintained all requirements on its
part for the continuation of such quotation. The Company has not, in the twelve
(12) months preceding the date hereof, received notice from the Principal
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 Principal 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.

c.           Authorized Shares.
 
(i)           The authorized capital stock of the Company consists of 10,000,000
shares of Preferred Stock, $0.001 par value per share, 2,000 shares of which
have been issued, 90,000,000 shares of Common Stock, $0.001 par value per share,
of which approximately 22,151,561 are undiluted shares and approximately
22,351,561 (fully diluted) are outstanding. Of the outstanding shares of Common
Stock, approximately 200,000 shares are beneficially owned by Affiliates of the
Company.

(ii)           Other than as set forth in the Company’s SEC Documents, there are
no outstanding securities which are convertible into or exchangeable for shares
of Common Stock, whether such conversion is currently exercisable or exercisable
only upon some future date or the occurrence of some event in the future.

(iii)           All issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable.  After
considering all other commitments that may require the issuance of Common Stock,
the Company has sufficient authorized and unissued shares of Common Stock as may
be necessary to effect the issuance of the Shares on the Closing Date, were (1)
the Notes issued and fully converted on that date and (2) the Warrant issued and
fully exercised on that date.

(iv)           The Shares have been duly authorized by all necessary corporate
action on the part of the Company, and, when issued (1) on conversion of, or in
payment of interest on the Notes, or (2) upon exercise of the Warrant, in each
case in accordance with their respective terms, will have been duly and validly
issued, fully paid and non-assessable, free from all taxes, liens, claims,
pledges, mortgages, restrictions, obligations, security interests and
encumbrances of any kind, nature and description, and will not subject the
Holder thereof to personal liability by reason of being a Holder.

(v)           The Conversion Shares and Warrant Shares are enforceable against
the Company and the Company presently has no claims or defenses of any nature
whatsoever with respect to the Conversion Shares or the Warrant Shares.
 
 
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d.           Transaction Documents and Stock.  This Agreement and each of the
other Transaction Documents, and the transactions contemplated hereby and
thereby, have been duly and validly authorized by the Company. This Agreement
has been duly executed and delivered by the Company and this Agreement is, and
the Notes, the Security Agreement, the Warrant, the Request, the Escrow
Agreement and each of the other Transaction Documents, when executed and
delivered by the Company (if necessary), will be, valid and binding obligations
of the Company enforceable in accordance with their respective terms, subject as
to enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors’
rights generally.

e.           Non-contravention.  The execution and delivery of this Agreement
and each of the other Transaction Documents by the Company, the issuance of the
Securities in accordance with the terms hereof, and the consummation by the
Company of the other transactions contemplated by this Agreement, the Notes, the
Security Agreement, the Warrant, the Request, the Escrow Agreement and the other
Transaction Documents do not and will not conflict with or result in a breach by
the Company of any of the terms or provisions of, or constitute a default under
(i) the Certificate of Incorporation or bylaws of the Company, each as currently
in effect, (ii) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Company is a party or by which it or any of
its properties or assets are bound, including any listing agreement for the
Common Stock except as herein set forth, or (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, except such conflict, breach or default which would
not have or result in a Material Adverse Effect.

f.           Approvals.  No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.

g.           Filings; Financial Statements.  None of the Company’s SEC Documents
contained, at the time they were filed, any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company with
the SEC under the 1934 Act on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Document prior to the
expiration of any such extension.  As of their respective dates, the financial
statements of the Company included in the Company’s SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  No other information provided by or on behalf of the Company to
the Buyer which is not included in the Company’s SEC Documents, including,
without limitation, information referred to in this Agreement, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.

h.           Absence of Certain Changes.  Since the Last Audited Date, there has
been no Material Adverse Effect, except as disclosed in the Company’s SEC
Documents. Since the Last Audited Date, except as provided in the Company’s SEC
Documents, the Company has not (i) incurred or become subject to any material
liabilities (absolute or contingent) except liabilities incurred in the ordinary
course of business consistent with past practices; (ii) discharged or satisfied
any material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to stockholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other material tangible assets, or canceled any material debts
owed to the Company by any third party  or material claims of the Company
against any third party, except in the ordinary course of business consistent
with past practices; (v) waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any increases in employee compensation, except in
the ordinary course of business consistent with past practices; or (vii)
experienced any material problems with labor or management in connection with
the terms and conditions of their employment.
 
 
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i.           Full Disclosure.  There is no fact known to the Company or that the
Company should know after having made all reasonable inquiries (other than
conditions known to the public generally or as disclosed in the Company’s SEC
Documents) that has not been disclosed in writing to the Buyer that would
reasonably be expected to have or result in a Material Adverse Effect.

j.           Absence of Litigation.  There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company, threatened against or affecting the Company
before or by any governmental authority or non-governmental department,
commission, board, bureau, agency or instrumentality or any other person,
wherein an unfavorable decision, ruling or finding would have a Material Adverse
Effect or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, any of the
Transaction Documents.  The Company is not aware of any valid basis for any such
claim that (either individually or in the aggregate with all other such events
and circumstances) could reasonably be expected to have a Material Adverse
Effect. There are no outstanding or unsatisfied judgments, orders, decrees,
writs, injunctions or stipulations to which the Company is a party or by which
it or any of its properties is bound, that involve the transaction contemplated
herein or that, alone or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.

k.           Absence of Events of Default. Neither the Company nor any of its
Subsidiaries is in violation of or in default with respect to (i) its
Certificate of Incorporation or bylaws or other organizational documents, each
as currently in effect, or any material judgment, order, writ, decree, statute,
rule or regulation applicable to such entity; or (ii) any material mortgage,
indenture, agreement, instrument or contract to which such entity is a party or
by which it or any of its properties or assets are bound (nor is there any
waiver in effect which, if not in effect, would result in such a violation or
default), except such breach or default which would not have or result in a
Material Adverse Effect.

l.           Absence of Certain Company Control Person Actions or Events.  Other
than as set forth in the Company’s SEC Documents, none of the following has
occurred during the past five (5) years with respect to a Company Control
Person:

(i) A petition under the federal bankruptcy laws or any state insolvency law was
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such Company Control
Person, or any partnership in which he or she was a general partner at or within
two years before the time of such filing, or any corporation or business
association of which he or she was an executive officer at or within two years
before the time of such filing;

(ii) Such Company Control Person was convicted in a criminal proceeding or is a
named subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses);
 
 
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(iii) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him or her from, or
otherwise limiting, the following activities:

A. acting, as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, as a futures
commission merchant, introducing broker, commodity trading advisor, commodity
pool operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice
in connection with such activity;

B. engaging in any type of business practice; or

C. engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of federal or state
securities laws or federal commodities laws;

(iv) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than sixty (60)
days the right of such Company Control Person to engage in any activity
described in subsection (iii) immediately above, or to be associated with
Persons engaged in any such activity; or

(v) Such Company Control Person was found by a court of competent jurisdiction
in a civil action or by the CFTC or SEC to have violated any federal or state
securities law, and the judgment in such civil action or finding by the CFTC or
SEC has not been subsequently reversed, suspended, or vacated.

m.           No Undisclosed Liabilities or Events.  The Company has no
liabilities or obligations other than those disclosed in the Transaction
Documents or the Company’s SEC Documents or those incurred in the ordinary
course of the Company’s business since the Last Audited Date, or which
individually or in the aggregate, do not or would not have a Material Adverse
Effect.  No event or circumstance has occurred or exists with respect to the
Company or its properties, business, operations, condition (financial or
otherwise), or results of operations, which, under applicable law, rule or
regulation, requires public disclosure or announcement prior to the date hereof
by the Company but which has not been so publicly announced or disclosed.  There
are no proposals currently under consideration or currently anticipated to be
under consideration by the Board of Directors or the executive officers of the
Company which proposal would (i) change the Certificate of Incorporation or
bylaws of the Company, each as currently in effect, with or without stockholder
approval, which change would reduce or otherwise adversely affect the rights and
powers of the stockholders of the Common Stock or (ii) materially or
substantially change the business, assets or capital of the Company, including
its interests in Subsidiaries.

n.           No Integrated Offering.  Neither the Company nor any of its
Affiliates nor any Person acting on its or their behalf has, directly or
indirectly, made any offer or sales of any security or solicited any offers to
buy any security under circumstances that would eliminate the availability of
the exemption from registration under Regulation D in connection with the offer
and sale of the Securities as contemplated hereby.
 
 
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o.           Dilution.  Each of the Company and its executive officers and
directors is aware that the number of shares issuable upon conversion of the
Notes and exercise of the Warrant, or pursuant to the other terms of the
Transaction Documents may have a dilutive effect on the ownership interests of
the other stockholders (and Persons having the right to become stockholders) of
the Company.  The Company specifically acknowledges that its obligation to issue
(i) the Conversion Shares upon conversion of the Notes and (ii) the Warrant
Shares upon exercise of the Warrant, is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other stockholders of the Company, and the Company will honor such obligations,
including honoring every Notice of Conversion (or “Conversion Notice” as
contemplated by the Notes), unless the Company is subject to an injunction
(which injunction was not sought by the Company or any of its directors or
executive officers) prohibiting the Company from doing so.

p.           Fees to Brokers, Placement Agents and Others.  The Company has
taken no action which would give rise to any claim by any Person for a brokerage
commission, placement agent or finder’s fees or similar payments by the Buyer
relating to this Agreement or the transactions contemplated hereby.  Except for
such fees arising as a result of any agreement or arrangement entered into by
the Buyer without the knowledge of the Company (a “Buyer’s Fee”), the Buyer
shall have no obligation with respect to such fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
subsection that may be due in connection with the transactions contemplated
hereby.  The Company shall indemnify and hold harmless each of the Buyer, its
employees, officers, managers, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorneys’ fees) and expenses suffered in respect of
any such claimed or existing fees (other than a Buyer’s Fee, if any).

q.           Disclosure.  All information relating to or concerning the Company
set forth in the Transaction Documents or in the Company’s public filings with
the SEC or otherwise provided by or on behalf of the Company to the Buyer is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.  No event or
circumstance has occurred or exists with respect to the Company or its business,
properties, prospects, operations or financial conditions, which under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company.

r.           Confirmation.  The Company agrees that, if, to the knowledge of the
Company, any events occur or circumstances exist prior to the payment of the
Purchase Price to the Company which would make any of the Company’s
representations or warranties set forth herein materially untrue or materially
inaccurate as of such date, the Company shall immediately notify the Buyer in
writing prior to such date of such fact, specifying which representation,
warranty or covenant is affected and the reasons therefor.
 
s.           Title. The Company and the Subsidiaries, if applicable, own and
have good and marketable title in fee simple absolute to, or a valid leasehold
interest in, all their respective real properties and good title to their other
respective assets and properties, subject to no liens, claims or encumbrances
except as have been disclosed to the Buyer.
 
t.           Intellectual Property.
 
(i)           Ownership.  The Company owns or possesses or can obtain on
commercially reasonable terms sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses
(software or otherwise), information, processes and similar proprietary rights
(“Intellectual Property”) necessary to the business of the Company as presently
conducted, the lack of which could reasonably be expected to have a Material
Adverse Effect.  Except for agreements with its own employees or consultants,
standard end-user license agreements, support/maintenance agreements and
agreements entered in the ordinary course of the Company’s business, all of
which have been made available for review by the Buyer, there are no outstanding
options, licenses or agreements relating to the Intellectual Property, and the
Company is not bound by or a party to any options, licenses or agreements with
respect to the Intellectual Property of any other person or entity.  The Company
has not received any written communication alleging that the Company has
violated or, by conducting its business as currently conducted, would violate
any of the Intellectual Property of any other person or entity, nor is the
Company aware of any basis therefor.  The Company is not obligated to make any
payments by way of royalties, fees or otherwise to any owner or licensor of or
claimant to any Intellectual Property with respect to the use thereof in
connection with the present conduct of its business other than in the ordinary
course of its business.  There are no agreements, understandings, instruments,
contracts, judgments, orders or decrees to which the Company is a party or by
which it is bound which involve indemnification by the Company with respect to
infringements of Intellectual Property, other than in the ordinary course of its
business.
 
 
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(ii)           No Breach by Employees.  The Company is not aware that any of its
employees is obligated under any contract or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
materially interfere with the use of his or her efforts to promote the interests
of the Company or that would conflict with the Company’s business as presently
conducted.  Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company’s business by the employees of the Company, nor the
conduct of the Company’s business as presently conducted, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated.  The Company does not
believe it is or will be necessary to use any inventions of any of its employees
made prior to their employment by the Company of which it is aware.

5.           CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

a.           Covenants and Acknowledgements of the Buyer.

(i)           Transfer Restrictions.  The Buyer acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the 1933 Act and, except as included in an effective registration statement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder, or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of such Rule
and further, if such Rule is not applicable, any resale of such Securities under
circumstances in which the seller, or the Person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (3) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.

(ii)           Restrictive Legend.  The Buyer acknowledges and agrees that,
until such time as the relevant Shares have been registered under the 1933 Act,
and may be sold in accordance with an effective registration statement, or until
such Shares can otherwise be sold without restriction, whichever is earlier, the
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
 
 
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

b.           Covenants, Acknowledgements and Agreements of the Company. As a
condition to the Buyer’s obligation to purchase the Securities contemplated by
this Agreement, and as a material inducement for the Buyer to enter into this
Agreement and the other Transaction Documents, until all of the Company’s
obligations hereunder and the Notes are paid and performed in full, or within
the timeframes otherwise specifically set forth below, the Company shall comply
with the following covenants:

(i)           Filings.  From the date hereof until the date that is six (6)
months after all the Conversion Shares and Warrant Shares either have been sold
by the Buyer, or may permanently be sold by the Buyer without any restrictions
pursuant to Rule 144, (the “Registration Period”), the Company shall  timely
make all filings required to be made by it under the 1933 Act, the 1934 Act,
Rule 144 or any United States state securities laws and regulations thereof
applicable to the Company or by the rules and regulations of the Principal
Trading Market and such reports shall conform to the requirement of the
applicable laws, regulations and government agencies, and, unless such filing is
publicly available on the SEC’s EDGAR system (via the SEC’s web site at no
additional charge), the Company shall provide a copy thereof to the Buyer
promptly after such filing.  Additionally, within four (4) business days
following the date of this Agreement, the Company shall file a current report on
Form 8-K describing the terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and approved by the
Buyer and attaching the material transaction documents as exhibits to such
filing. The Company further agrees to redact all confidential information from
such Form 8-K. Reference is made to the Section titled “Publicity, Filings,
Releases, Etc.” below.  Additionally, the Company shall furnish to the Buyer, so
long as the Buyer owns any Securities or Common Stock, promptly upon request,
(1) a written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (2) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Buyer to sell such securities pursuant to
Rule 144 without registration.

(ii)           Reporting Status.  So long as the Buyer beneficially owns
Securities and for at least twenty (20) Trading Days thereafter, the Company
shall file all reports required to be filed with the SEC pursuant to Sections 13
or 15(d) of the 1934 Act, shall take all reasonable action under its control to
ensure that adequate current public information with respect to the Company, as
required in accordance with Rule 144(c)(2) of the 1933 Act, is publicly
available, and shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination.

(iii)           Listing.  The Company’s Common Stock shall be listed or quoted
for trading on any of (a) NYSE Amex, (b) the New York Stock Exchange, (c) the
Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC
Bulletin Board. The Company shall promptly secure the listing of all of the
Conversion Shares and Warrant Shares upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is then listed
(subject to official notice of issuance) and shall maintain such listing of all
securities from time to time issuable under the terms of the Transaction
Documents. The Company will comply in all material respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Principal Trading Market and/or the Financial Industry Regulatory Authority,
Inc. (“FINRA”) or any successor thereto, as the case may be, applicable to it at
least through the date which is sixty (60) days after the later of (x) the date
on which the Notes have been converted or has been paid in full, or (y) the date
on which the Warrant has been exercised in full.
 
 
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(iv)           Use of Proceeds.  The Company will use the net proceeds received
hereunder for working capital and general corporate purposes; provided, however,
the Company will not use such proceeds to pay fees payable (a) to any broker or
finder relating to the offer and sale of the Notes and the Warrant, or (b) to
any other party relating to any financing transaction effected prior to the
Closing Date.

(v)           Publicity, Filings, Releases, Etc.  Each of the parties agrees
that it will not disseminate any information relating to the Transaction
Documents or the transactions contemplated thereby, including issuing any press
releases, holding any press conferences or other forums, or filing any reports
(collectively, “Publicity”), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof.  Neither party
will include in any such Publicity any statement or statements or other material
to which the other party reasonably objects, unless in the reasonable opinion of
counsel to the party proposing such statement, such statement is legally
required to be included.  In furtherance of the foregoing, the Company will
provide to the Buyer’s Counsel drafts of the applicable text of the first filing
of a current report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or
10-K (or equivalent SB forms), as the case may be, intended to be made with the
SEC which refers to the Transaction Documents or the transactions contemplated
thereby as soon as practicable (but at least two (2) Trading Days before such
filing will be made) and will not include in such filing (or any other filing
filed before then) any statement or statements or other material to which the
other party reasonably objects, unless in the reasonable opinion of counsel to
the party proposing such statement, such statement is legally required to be
included.  Notwithstanding the foregoing, each of the parties hereby consents to
the inclusion of the text of the Transaction Documents in filings made with the
SEC (but any descriptive text accompanying or part of such filing shall be
subject to the other provisions of this subsection).  Notwithstanding, but
subject to, the foregoing provisions of this  provision, the Company will,
within four (4) business days after the Closing Date, promptly issue a press
release and file a current report on Form 8-K or, if appropriate, a quarterly or
annual report on the appropriate form, describing the terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act
and approved by the Buyer and attaching the material Transaction Documents as
exhibits to such filing. The Company further agrees to redact all confidential
information from such Form 8-K.

(vi)           FINRA Rule 5110. In the event that the Corporate Financing Rule
5110 of FINRA is or becomes applicable to the transactions contemplated by the
Transaction Documents or to the sale by a Holder of any of the Securities, then
the Company shall, to the extent required by such rule, timely make any filings
and cooperate with any broker or selling stockholder in respect of any consents,
authorizations or approvals that may be necessary for FINRA to timely and
expeditiously permit the Holder to sell the Securities.

(vii)           Keeping of Records and Books of Account. The Company shall keep
and cause each Subsidiary, if any, to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
such Subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

(viii)           Corporate Existence.  The Company shall (a) do all things
necessary to preserve and keep in full force and effect its corporate existence,
including, without limitation, all licenses or similar qualifications required
by it to engage in its business in all jurisdictions in which it is at the time
so engaged; (b) continue to engage in business of the same general type as
conducted as of the date hereof; and (c) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder.
 
 
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(ix)           Taxes.  The Company shall pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
delinquent or in default, which, if unpaid, might reasonably be expected to give
rise to liens or charges upon such properties or any part thereof, unless, in
each case, the validity or amount thereof is being contested in good faith by
appropriate proceedings and the Company has maintained adequate reserves with
respect thereto in accordance with GAAP.

(x)           Compliance. The Company shall comply in all material respects with
all federal, state and local laws and regulations, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations and
requirements applicable to it (collectively, “Requirements”) of all governmental
bodies, departments, commissions, boards, companies or associations insuring the
premises, courts, authorities, officials or officers which are applicable to the
Company, its business, operations, or any of its properties, except where the
failure to so comply would not have a Material Adverse Effect on the Company or
any of its properties; provided, however, that nothing provided herein shall
prevent the Company from contesting in good faith the validity or the
application of any Requirements.

(xi)           3(a)(10) Shares.  In the event the Company, in violation of the
covenants contained herein, ever ceases to be a reporting company for purposes
of the 1934 Act for any period of time, then the Company, for so long as Rule
144 is not available to the Buyer as an exemption from registration, shall cause
any of its stockholders who at such time are in possession of Common Stock
tradable under Section 3(a)(10) of the Securities Act (“3(a)(10) Shares”) to
cease to sell such 3(a)(10) Shares.

(xii)           Litigation.  From and after the date hereof and until all of the
Company’s obligations hereunder and the Notes are paid and performed in full and
the Warrant is exercised in full, the Company shall notify the Buyer in writing,
promptly upon learning thereof, of any litigation or administrative proceeding
commenced or threatened against the Company involving a claim in excess of
$100,000.00.

(xiii)           Performance of Obligations.  The Company shall promptly and in
a timely fashion perform and honor all demands, notices, requests and
obligations that exist or may arise under the Transaction Documents.

(xiv)           Failure to Make Timely Filings.  The Company agrees that, if the
Company fails to timely file on the SEC’s EDGAR system any information required
to be filed by it, whether on a Form 10-K, Form 10-Q, Form 8-K, Proxy Statement
or otherwise so as to be deemed a “reporting issuer” with current public
information under the 1934 Act, the Company shall be liable to pay to the Holder
an amount based on the following schedule (where “No. Business Days Late” refers
to each Trading Day after the latest due date for the relevant filing):
 

No. Business Days Late  
Late Filing Payment For
Each $10,000.00 of
Outstanding Principal of the Notes
1
 
$100.00
2
 
$200.00
3
 
$300.00
4
 
$400.00
5
 
$500.00
6
 
$600.00
7
 
$700.00
8
 
$800.00
9
 
$900.00
10   $1,000.00  >10     
$1,000.00 + $200.00 for each Trading
Day Late beyond 10 days

 
 
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The Company shall pay any payments incurred under this subsection in immediately
available funds upon demand by the Holder; provided, however, that the Holder
making the demand may specify that the payment shall be made in shares of Common
Stock at the Conversion Price (as defined in the Notes) applicable to the date
of such demand.  If the payment is to be made in shares of Common Stock, such
shares shall be considered Conversion Shares under the Notes, with the “Delivery
Date” for such shares being determined from the date of such demand. The demand
for payment of such amount in shares shall be considered a “Conversion Notice”
(but the delivery of such shares shall be in payment of the amount contemplated
by this subsection and not in payment of any principal or interest on the
Notes).
 
(xv)           Authorized Shares.  The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the full
conversion of the Notes and exercise of the Warrant multiplied by 1.5 (the
“Share Reserve”). If at any time the Share Reserve is insufficient to effect the
full conversion of the Notes and exercise of the Warrant, the Company shall
immediately increase the Share Reserve accordingly. If the Company does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Company shall call and hold a special meeting of the
stockholders within thirty (30) days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company’s management shall
recommend to the Company’s stockholders to vote in favor of increasing the
number of authorized shares of Common Stock.  Management shall also vote all of
its shares in favor of increasing the number of authorized shares of Common
Stock.

(xvi)           DWAC Eligibility. The Company shall take all action necessary to
achieve DWAC eligibility no later than March 31, 2011 (the “DWAC Eligibility
Date”).  Thereafter, for so long as (A) any portion of any of the Notes remains
outstanding, or (B) any portion of the Warrant remains unexercised, the Company
shall use best efforts to maintain such DWAC eligibility.
 
(xvii)           Certain Negative Covenants of the Company.  From and after the
date hereof and until all of the Company’s obligations hereunder and the Notes
are paid and performed in full, the Company shall not:
 
A.           Incur any new indebtedness for borrowed money without the prior
written consent of the Buyer, which consent may be withheld at the sole
discretion of the Buyer; provided, however the Company may incur obligations
under trade payables in the ordinary course of business consistent with past
practice without the consent of the Buyer;

B.           Grant or permit any security interest (or other lien or other
encumbrance) in or on any of its assets;

C.           Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate of the Company, or amend or modify any agreement related to
any of the foregoing, except on terms that are no less favorable, in any
material respect, than those obtainable from any person or entity who is not an
Affiliate of the Company;
 
 
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D.           Transfer, assign, sell, pledge, hypothecate or otherwise alienate
or encumber the Buyer Trust Deed Notes in any way without the prior written
consent of the Buyer; or

E.           Enter into any financing transaction without giving the Buyer at
least ten (10) days notice of such prospective financing transaction (the
“Transaction Notice”) and the pre-emptive right to provide such financing on
substantially similar terms upon notice thereof to the Company within five (5)
days of receiving the Transaction Notice.

6.           TRANSFER AGENT INSTRUCTIONS.

a.           The Company warrants that, with respect to the Securities, other
than the stop transfer instructions to give effect to Section 5(a)(i) hereof, it
will give the Transfer Agent no instructions inconsistent with instructions to
issue Common Stock from time to time upon conversion of the Notes and/or
exercise of the Warrant, as may be applicable from time to time, in such amounts
as specified from time to time by the Company to the Transfer Agent, bearing the
restrictive legend specified in Section 5(a)(ii) of this Agreement prior to
registration of the Shares under the 1933 Act, registered in the name of the
Buyer or its nominee and in such denominations to be specified by the Holder in
connection therewith.  Except as so provided, the Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents.  Nothing in this
Section shall affect in any way the Buyer’s obligations and agreement to comply
with all applicable securities laws upon resale of the Securities.  If the Buyer
provides the Company with an opinion of counsel reasonably satisfactory to the
Company that registration of a resale by the Buyer of any of the Securities in
accordance with clause (1)(B) of Section 5(a)(i) of this Agreement is not
required under the 1933 Act or upon request from a Holder while an applicable
registration statement is effective, the Company shall (except as provided in
clause (2) of Section 5(a)(i) of this Agreement) permit the transfer of the
Securities and, in the case of the Conversion Shares and the Warrant Shares, as
may be applicable, use its best efforts to cause the Transfer Agent to promptly
electronically transmit to the Holder via DWAC such Conversion Shares or Warrant
Shares.  The Company specifically covenants that, as of the DWAC Eligibility
Date, the Company’s Transfer Agent shall be (a) participating in the DWAC
program, and (b) DWAC eligible.  Moreover, the Company shall notify the Buyer in
writing if the Company at any time while the Holder holds Securities becomes
aware of any plans of the Transfer Agent to terminate such DWAC participation or
eligibility.  While any Holder holds Securities, the Company shall at all times
after the DWAC Eligibility Date maintain a transfer agent which participates in
the DWAC program and is DWAC eligible, and the Company will not appoint any
transfer agent which does not both participate in the DWAC program and maintain
DWAC eligibility.  Nevertheless, if at any time that the Company receives a
Conversion Notice the Transfer Agent is not participating in the DWAC program or
the Conversion Shares or Warrant Shares are not otherwise transferable via the
DWAC program, then the Company shall instruct the Transfer Agent to issue one or
more certificates for Common Stock without legend in such name and in such
denominations as specified by the Buyer.  In the event the Company’s transfer
agent is not DWAC eligible on any Conversion Date or Exercise Date (as defined
in the Warrant), and consequently the Company issues Conversion Shares or
Warrant Shares pursuant to a Notice of Conversion or Notice of Exercise in
certificated rather than electronic form, then in such event if the closing bid
price of the Common Stock on the Principal Trading Market is lower on the date
of delivery of the certificates to the Buyer than on the Conversion Date or
Exercise Date, as the case may be, then such difference in the closing bid
prices, multiplied by the number of Conversion Shares or Warrant Shares, as
applicable, shall be added to the principal balance of the applicable Note.

b.           (i)           The Company understands that a delay in the delivery
of Conversion Shares or Warrant Shares, whether on conversion of any of the
Notes and/or in payment of accrued interest, or exercise of the Warrant, beyond
the relevant Delivery Date (as defined in the Notes or the Warrant, as
applicable) could result in economic loss to the Holder.  As compensation to the
Holder for such loss, in addition to any other available remedies at law or
equity, the Company agrees to pay late payments to the Holder for late delivery
of the Shares in accordance with the following schedule (where “No. Business
Days Late” is defined as the number of Trading Days beyond two (2) Trading Days
after the Delivery Date):
 
 
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No. Business Days Late
 
Late Payment for Each $10,000,00
of Principal or Interest Being Converted
(or amount of Warrant exercise)
1
 
$100.00
2
 
$200.00
3
 
$300.00
4
 
$400.00
5
 
$500.00
6
 
$600.00
7
 
$700.00
8
 
$800.00
9
 
$900.00
10
 
$1,000.00
>10
 
$1,000.00 + $200.00 for each Business Day Late beyond 10 days

 
The amount of any payments incurred under this Section 6(b)(i) shall be
automatically added to the principal balance of the applicable Note and the
Company shall pay any such payments in immediately available funds upon demand.
Nothing herein shall limit the Holder’s right to pursue actual damages for the
Company’s failure to issue and deliver the Shares to the Holder within a
reasonable time.  Furthermore, in addition to any other remedies which may be
available to a Holder, in the event that the Company fails for any reason to
effect delivery of such Shares within two (2) Trading Days after the Delivery
Date, the Holder will be entitled to revoke the relevant Notice of Conversion or
Notice of Exercise by delivering a notice to such effect to the Company prior to
such Holder’s receipt of the relevant Shares, whereupon the Company and the
Holder shall each be restored to their respective positions immediately prior to
delivery of such Notice of Conversion or Notice of Exercise, as the case may be;
provided, however, that any payments contemplated by this Section 6(b)(i) which
have accrued through the date of such revocation notice shall remain due and
owing to the Holder notwithstanding such revocation.

(ii)           If, by the fifth Trading Day after the  relevant Delivery Date,
the Company fails for any reason to deliver the Shares, but at any time after
the Delivery Date, the Holder purchases, in an arm’s-length open market
transaction or otherwise, shares of Common Stock (the “Covering Shares”) in
order to make delivery in satisfaction of a sale of Common Stock by the Holder
(the “Sold Shares”), which delivery such Holder anticipated to make using the
shares to be issued upon such conversion or exercise (a “Buy-In”), the Holder
shall have the right to require the Company to pay to the Holder, in addition to
and not in lieu of  the amounts contemplated in other provisions of the
Transaction Documents, including, but not limited to, the provisions of the
immediately preceding Section 6(b)(i)), the Buy-In Adjustment Amount (as defined
below).  The “Buy-In Adjustment Amount” is the amount equal to the number of
Sold Shares multiplied by the excess, if any, of (x) the Holder’s total purchase
price per share (including brokerage commissions, if any) for the Covering
Shares over (y) the net proceeds per share (after brokerage commissions, if any)
received by the Holder from the sale of the Sold Shares.  The Company shall pay
the Buy-In Adjustment Amount to the Holder in immediately available funds
immediately upon demand by the Holder.  By way of illustration and not in
limitation of the foregoing, if the Holder purchases shares of Common Stock
having a total purchase price (including brokerage commissions) of $11,000.00 to
cover a Buy-In with respect to shares of Common Stock it sold for net proceeds
of $10,000.00, the Buy-In Adjustment Amount which Company will be required to
pay to the Holder will be $1,000.00.
 
 
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c.            The Company shall assume any fees or charges of the Transfer Agent
or Company Counsel regarding (i) the removal of a legend or stop transfer
instructions with respect to the Securities, and (ii) the issuance of
certificates or DWAC registration to or in the name of the Holder or the
Holder’s designee or to a transferee as contemplated by an effective
registration statement.  Notwithstanding the foregoing, it shall be the Holder’s
responsibility to obtain all needed formal requirements (specifically: medallion
guarantee and prospectus delivery compliance) in connection with any electronic
issuance of shares of Common Stock.

d.           The Holder of any Note  shall be entitled to exercise its
conversion privilege with respect to such Note, as the case may be,
notwithstanding the commencement of any case under 11 U.S.C. §101 et seq. (the
“Bankruptcy Code”).  In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives, to the fullest extent permitted, any rights to
relief it may have under 11 U.S.C. §362 in respect of such Holder’s exercise
privilege.  The Company hereby waives, to the fullest extent permitted, any
rights to relief it may have under 11 U.S.C. §362 in respect of the conversion
of such Note. The Company agrees, without cost or expense to such Holder, to
take or to consent to any and all action necessary to effectuate relief under 11
U.S.C. §362.

7.           CLOSING DATE.

a.           The Closing Date shall occur on the date which is the first Trading
Day after each of the conditions contemplated by Sections 8 and 9 hereof shall
have either been satisfied or been waived by the party in whose favor such
conditions run.

b.           Closing of the purchase and sale of the Notes and the Warrant,
which the parties anticipate shall occur concurrently with the execution of this
Agreement, shall occur at the offices of the Buyer and shall take place no later
than 3:00 P.M., Eastern Time, or on such day or such other time as is mutually
agreed upon by the Company and the Buyer.

8.           CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The Buyer
understands that the Company’s obligation to sell the Notes and the Warrant to
the Buyer pursuant to this Agreement on the Closing Date is conditioned upon all
of the following conditions, any of which may be waived in whole or in part by
the Company:

a.           The execution and delivery of this Agreement and, as applicable,
the other Transaction Documents by the Buyer on or before the Closing Date;

b.           Delivery by the Buyer by or on the Closing Date of good funds as
payment in full of an amount equal to the Initial Cash Purchase Price in
accordance with this Agreement;

c.           Delivery by the Buyer to the Company of executed copies of the
Buyer Trust Deed Notes and the Trust Deed on or before the Closing Date;

d.           The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date; and
 
 
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e.           There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

9.           CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE. The Buyer’s
obligation to purchase the Notes and the Warrant is conditioned upon and subject
to the fulfillment, on or prior to the Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by the Buyer:

a.           The execution and delivery of this Agreement, the Security
Agreement, the Request, the Escrow Agreement, the Transfer Agent Letter and, as
applicable, the other Transaction Documents by the Company on or before the
Closing Date;

b.           The delivery by the Company to the Buyer of the Notes and the
Warrant, each in original form, duly executed by the Company, in accordance with
this Agreement;

c.           On the Closing Date, each of the Transaction Documents executed by
the Company on or before such date shall be in full force and effect and the
Company shall not be in default thereunder;

d.           On or prior to the Closing Date, the Share Reserve shall be
sufficient to effect the full conversion of the Notes and exercise of the
Warrant as of the Closing Date;

e.           The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement and
the other Transaction Documents, each as if made on such date, and the
performance by the Company on or before such date of all covenants and
agreements of the Company required to be performed on or before such date;

f.           There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained;

g.           From and after the date hereof to and including the Closing Date,
each of the following conditions will remain in effect: (i) the trading of the
Common Stock shall not have been suspended by the SEC or on the Principal
Trading Market; (ii) trading in securities generally on the Principal Trading
Market shall not have been suspended or limited; (iii), no minimum prices shall
been established for securities traded on the Principal Trading Market; (iv)
there shall not have been any material adverse change in any financial market;
and (v) there shall not have occurred any Material Adverse Effect;

h.           Except for any notices required or permitted to be filed after the
Closing Date with certain federal and state securities commissions, the Company
shall have obtained (i) all governmental approvals required in connection with
the lawful sale and issuance of the Securities, and (ii) all third party
approvals required to be obtained by the Company in connection with the
execution and delivery of the Transaction Documents by the Company or the
performance of the Company’s obligations thereunder; and

i.           All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents and instruments
incident to such transactions shall be reasonably satisfactory in substance and
form to the Buyer.
 
 
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10.           INDEMNIFICATION.

a.           The Company agrees to defend, indemnify and forever hold harmless
the Buyer and its officers, managers, employees, and agents, and each Buyer
Control Person (the “Buyer Parties”) from and against any losses, claims,
damages, liabilities or expenses incurred (collectively, “Damages”), joint or
several, and any action in respect thereof to which the Buyer, its partners,
Affiliates, officers, directors, employees, and duly authorized agents, and any
such Buyer Control Person becomes subject, resulting from, arising out of or
relating to any misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of the Company
contained in this Agreement, as such Damages are incurred. The Buyer Parties
with the right to be indemnified under this Section (the “Indemnified Parties”)
shall have the right to defend any such action or proceeding with attorneys of
their own selection, and the Company shall be solely responsible for all costs
and expenses related thereto.  If the Indemnified Parties opt not to retain
their own counsel, the Company shall defend any such action or proceeding with
attorneys of its choosing at its sole cost and expense, provided that such
attorneys have been pre-approved by the Indemnified Parties, which approval
shall not be unreasonably withheld, and provided further that the Company may
not settle any such action or proceeding without first obtaining the written
consent of the Indemnified Parties.

b.           The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar rights of the Buyer Parties against the
Company or others, and (ii) any liabilities the Company may be subject to.

11.           SPECIFIC PERFORMANCE.  The Company and  the Buyer acknowledge and
agree that irreparable damage would occur in the event that any provision of
this Agreement or any of the other Transaction Documents were not performed in
accordance with its specific terms or were otherwise breached.  It is
accordingly agreed that the parties (including any Holder) shall be entitled to
an injunction or injunctions, without (except as specified below) the necessity
to post a bond, to prevent or cure breaches of the provisions of this Agreement
or such other Transaction Document and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity; provided, however that the
Company, upon receipt of a Notice of Conversion or a Notice of Exercise, may not
fail or refuse to deliver the stock certificates and the related legal opinions,
if any, or if there is a claim for a breach by the Company of any other
provision of this Agreement or any of the other Transaction Documents, the
Company shall not raise as a legal defense, any claim that the Holder or anyone
associated or affiliated with the Holder has violated any provision hereof or
any other Transaction Document or has engaged in any violation of law or any
other claim or defense, unless the Company has first posted a bond for one
hundred fifty percent (150%) of the principal amount and, if relevant, then
obtained a court order specifically directing it not to deliver said stock
certificates to the Holder. The proceeds of such bond shall be payable to the
Holder to the extent that the Holder obtains judgment or its defense is
recognized.  Such bond shall remain in effect until the completion of the
relevant proceeding and, if the Holder appeals therefrom, until all such appeals
are exhausted.  This provision is deemed incorporated by reference into each of
the Transaction Documents as if set forth therein in full.

12.           OWNERSHIP LIMITATION. If at any time after the Closing, the Buyer
shall or would receive shares of the Company’s Common Stock in payment of
interest or principal under the Notes or upon conversion of the Notes or
exercise of the Warrant, so that the Buyer would, together with other shares of
Common Stock held by it or its Affiliates, hold by virtue of such action or
receipt of additional shares of Common Stock a number of shares exceeding 9.99%
of the number of shares of the Company’s Common Stock outstanding on such date
(the “9.99% Cap”), the Company shall not be obligated and shall not issue to the
Buyer shares of its Common Stock which would exceed the 9.99% Cap, but only
until such time as the 9.99% Cap would no longer be exceeded by any such receipt
of shares of Common Stock by the Buyer.
 
 
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13.           MISCELLANEOUS.  The Company and the Buyer hereby agree that the
provisions of this Section 13 shall apply to all of the Transaction Documents.

a.           Governing Law and Venue.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Utah for contracts to be
wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws.  Each of the parties consents to the
exclusive jurisdiction of the federal courts whose districts encompass any part
of the County of Salt Lake or the state courts of the State of Utah sitting in
the County of Salt Lake in connection with any dispute arising under this
Agreement or any of the other Transaction Documents, and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions or to any claim that such venue of the suit, action or proceeding
is improper. Nothing in this subsection shall affect or limit any right to serve
process in any other manner permitted by law.

b.           No Waiver.  Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.

c.           Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties hereto.

d.           Pronouns.  All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may permit or
require.

e.           Counterparts.  This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to constitute one instrument.  Facsimile and email
copies of signed signature pages will be deemed binding originals.

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

g.           Severability.  Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such provision shall be modified to achieve
the objective of the parties to the fullest extent permitted and such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

h.           Amendment.  This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.

i.           Entire Agreement.  This Agreement together with the other
Transaction Documents constitute and contain the entire agreement between the
Company and the Buyer and supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.

j.           Currency.  All dollar amounts referred to or contemplated by this
Agreement or any other Transaction Document shall be deemed to refer to US
Dollars, unless otherwise explicitly stated to the contrary.

k.           Buyer’s Expenses.  In the event the Company or the Buyer elects not
to effect the Closing for any reason, the Company shall pay $15,000 in cash to
the Buyer for the Buyer’s legal, administrative and due diligence
expenses.  Except as provided in the immediately preceding sentence, and except
for $15,000 which has been added to and included in the principal amount of Note
#1 for the Buyer’s legal, administrative and due diligence expenses, the Company
and the Buyer shall be responsible for paying such party’s own fees and expenses
(including legal expenses) incurred in connection with the preparation and
negotiation of this Agreement and the other Transaction Documents and the
closing of the transactions contemplated hereby and thereby.
 
 
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l.           Assignment by the Company.  Notwithstanding anything to the
contrary herein, the rights, interests or obligations hereunder may not be
assigned, by operation of law or otherwise, in whole or in part, by the Company
without the prior written consent of the Buyer, which consent may be withheld at
the sole discretion of the Buyer; provided, however, that in the case of a
merger, sale of substantially all of the Company’s assets or other corporate
reorganization, the Buyer shall not unreasonably withhold, condition or delay
such consent.

m.           Advice of Counsel. In connection with the preparation of this
Agreement and all other Transaction Documents, each of the Company, its
stockholders, officers, agents, and representatives acknowledges and agrees that
the attorney that prepared this Agreement and all of the other Transaction
Documents acted as legal counsel to the Buyer only.  Each of the Company, its
stockholders, officers, agents, and representatives (i) hereby acknowledges that
he/she/it has been, and hereby is, advised to seek legal counsel and to review
this Agreement and all of the other Transaction Documents with legal counsel of
his/her/its choice, and (ii) either has sought such legal counsel or hereby
waives the right to do so.

n.           No Strict Construction. The language used in this Agreement is the
language chosen mutually by the parties hereto and no doctrine of construction
shall be applied for or against any party.

o.           Attorney’s Fees.  In the event of any action at law or in equity to
enforce or interpret the terms of this Agreement or any of the other Transaction
Documents, the Prevailing Party (as defined hereafter) shall be entitled to
reasonable attorneys’ fees, court costs and collection costs in addition to any
other relief to which such party may be entitled.  “Prevailing Party” shall mean
the party in any litigation or enforcement action that prevails in the highest
number of final rulings, counts or judgments adjudicated by a court of competent
jurisdiction.

p.           Replacement of the Notes. Subject to any restrictions on or
conditions to transfer set forth in the Notes, the Holder of the Notes, at its
option, may in person or by duly authorized attorney surrender the same for
exchange at the Company’s chief executive office, and promptly thereafter and at
the Company’s expense, except as provided below, receive in exchange therefor
one or more new convertible secured promissory note(s), each in the principal
requested by such Holder, dated the date to which interest shall have been paid
on each Note so surrendered or, if no interest shall have yet been so paid,
dated the date of the Note or Notes so surrendered and registered in the name of
such person or persons as shall have been designated in writing by such Holder
or its attorney for the same principal amount as the then unpaid principal
amount of the Note or Notes so surrendered. As applicable, upon receipt by the
Company of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of the Notes and (a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the
case of mutilation, upon surrender thereof, the Company, at its expense, will
execute and deliver in lieu thereof a new convertible secured promissory note
executed in the same manner as the Note or Notes being replaced, in the same
principal amount as the unpaid principal amount of such Note or Notes and dated
the date to which interest shall have been paid on the each Note or, if no
interest shall have yet been so paid, dated the date of each Note.

q.           Notices. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of

(a) the date delivered, if delivered by personal delivery as against written
receipt therefor or by confirmed facsimile or electronic mail transmission,
 
 
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(b) the fifth Trading Day after deposit, postage prepaid, in the United States
Postal Service by registered or certified mail, or

(c) the third Trading Day after mailing by domestic or international express
courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days’ advance written notice similarly given to each of the other
parties hereto):

If to the Company:

World Series of Golf, Inc.
Attn: James Tilton
2520 South 3rd Street, Suite 206
Louisville, Kentucky 40208

If to the Buyer:

Inter-Mountain Capital Corp.
Attn: John M. Fife
303 East Wacker Drive, Suite 1200
Chicago, Illinois  60601

with a copy to (which shall not constitute notice):

Bennett Tueller Johnson & Deere, P.C.
Attn: Jonathan K. Hansen
3165 East Millrock Drive, Suite 500
Salt Lake City, Utah 84121

14.           SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. The
Company’s and the Buyer’s covenants, agreements, representations and warranties
contained herein shall survive the execution and delivery of this Agreement and
the other Transaction Documents and the Closing hereunder, and shall inure to
the benefit of the Buyer and the Company and their respective successors and
permitted assigns.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
 
 
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IN WITNESS WHEREOF, each of the undersigned represents that the foregoing
statements made by it above are true and correct and that it has caused this
Agreement to be duly executed on its behalf (if an entity, by one of its
officers thereunto duly authorized) as of the date first above written.
 

TOTAL PURCHASE PRICE: $1,300,000.00     INITIAL CASH PURCHASE PRICE: $100,000.00

 

  THE BUYER:           INTER-MOUNTAIN CAPITAL CORP.            
By:
/s/        John M. Fife, President          

  THE COMPANY:           WORLD SERIES OF GOLF, INC.            
By:
/s/      Name:       Title:             

[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
 
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ANNEX I
 
WIRE INSTRUCTIONS
         
ANNEX II
 
NOTES (COMPANY NOTES 1-7)
         
ANNEX III
 
SECURITY AGREEMENT
         
ANNEX IV
 
TRUST DEED
         
ANNEX V
 
WARRANT
         
ANNEX VI
 
REQUEST
         
ANNEX VII
 
ESCROW AGREEMENT
         
ANNEX VIII
 
TRANSFER AGENT LETTER
         
ANNEX IX
 
BUYER TRUST DEED NOTE #1
         
ANNEX X
 
BUYER TRUST DEED NOTE #2
         
ANNEX XI
 
BUYER TRUST DEED NOTE #3
         
ANNEX XII
 
BUYER TRUST DEED NOTE #4
         
ANNEX XIII
 
BUYER TRUST DEED NOTE #5
         
ANNEX XIV
 
BUYER TRUST DEED NOTE #6

 
 
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