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Exhibit 10.1

LINE OF CREDIT AGREEMENT

LINE OF CREDIT AGREEMENT ("Agreement,"), dated as of October 8, 2009, by and
among ICP Solar Technologies, Inc., a Nevada corporation, ("Company"), and each
buyer listed on the Schedule of Buyers attached hereto that has executed this
Agreement (each, including its successors and assigns, a “Buyer” and
collectively the “Buyers”).  Buyers may include only parties that were among the
Initial Buyers (as defined below).

WHEREAS:

 A.       

The Company, BridgePointe Master Fund Ltd., Platinum Long Term Growth VI, LLC
and Gemini Master Fund, Ltd. (“Initial Buyers”) previously entered into a
Securities Purchase Agreement (“2008 Securities Purchase Agreement”) and other
transaction documents dated June 13, 2008, which were subsequently amended on
December 31, 2008 and on September 17, 2009 (“Initial Transaction Documents”),
pursuant to which the Company issued to the Buyers 11% Senior Secured
Convertible Debentures Due June 13, 2010 (the “2008 Debentures”), on or about
June 13, 2008, in the amounts specified in the Initial Transaction Documents;

B.

The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the “Commission” or the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");

C.

The Buyers and the Company have agreed that the Buyers, at their option, may
make advances and extend credit to the Company under the Grid Note pursuant to
the terms hereof, up to a maximum aggregate Principal Amount (after accounting
for the Original Issue Discount) of $888,000 (the “Maximum Aggregate Principal
Amount”), in the aggregate (which equates to a $800,000 of Advances), and each
Buyer shall be entitled to purchase its Pro-Rata Percentage (as set forth next
to such Buyer’s name in the Schedule of Buyers attached hereto) of the Maximum
Aggregate Principal Amount (collectively, the “Offering”);

D.

The terms of the Grid Notes, including the terms on which the Grid Notes may be
converted into common stock, par value $0.00001 per share, of the Company
(“Common Stock”), are set forth in the Grid Note, in the form attached hereto as
Exhibit A;

E.    

The Initial Parties agree that the Grid Notes will rank pari passu to the
debentures issued pursuant to the Initial Transaction Documents (“June 2008
Debentures”) and will thus, along with the June 2008 Debentures, rank senior to
all outstanding and future indebtedness of the Company, guaranteed by each of
the Company's Active Subsidiaries pursuant to the subsidiary guarantee attached
hereto as Exhibit E-1 (the "Subsidiary Guarantee"), and secured by a first
priority, perfected security interest in certain of the assets of the Company
and the stock and certain of the assets of each of the Company's subsidiaries,
as evidenced by the security agreement attached hereto as Exhibit E-2 (the
"Security Agreement")

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F.

The Grid Notes will be guaranteed by each of the Company's subsidiaries pursuant
to the subsidiary guarantee attached hereto as Exhibit B-1 (the "Subsidiary
Guarantee"), and be secured as evidenced by the security agreement attached
hereto as Exhibit B-2 (the "Security Agreement") and the intellectual property
security agreement attached hereto as Exhibit B-3 (the “Intellectual Property
Security Agreement”).

         NOW THEREFORE, the Company and the Buyer, severally and not jointly,
hereby agree as follows:

1.       

PURCHASE AND SALE OF GRID NOTES.

(a) 

Certain Definitions.  The Company and the Buyer mutually agree to the terms of
each of the Transaction Documents.  For purposes hereof:

“1934 Act” shall mean the Securities Exchange Act of 1934, as amended.

"Approved Stock Plan" means any employee benefit plan which has been duly
adopted by the Board of Directors of the Company or a majority of the members of
a committee of non-employee directors established for such purpose, pursuant to
which the Company's securities may be issued to any employee, consultant,
officer or director for services provided to the Company; provided, however,
that no more than an aggregate of 2,000,000 shares of Common Stock Equivalents
may be issued in connections with all Approved Stock Plans.

“Active Subsidiaries” shall mean all of the Company’s Subsidiaries, other than
the Inactive Subsidiaries.

"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in the City of New York, New York are authorized or
required by law or executive order to remain closed.

“Closing Bring-Down Certificate” shall have the meaning set forth in Section
3(c) below.

“Closing Certificate” shall have the meaning set forth in Section 1(b)(iv)(B)
below.

“Collateral” shall have the meaning ascribed to it in the Security Agreement.

“Common Stock” shall have the meaning set forth in Recital “B” above.

 “Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire, directly or
indirectly, at any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, 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.

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“Conversion Shares” shall have the meaning set forth in Section 2(a) below.

“Convertible Securities” shall have the meaning ascribed to it in the Grid Note.

“Designated Insiders” shall have the meaning set forth in Section 4(n) below.

 "Eligible Market" means the over the counter Bulletin Board (“OTC-BB”), the New
York Stock Exchange, Inc., the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market or the American Stock Exchange.

 “Exempt Issuance” means the issuance of (a) any Common Stock or options issued
or issuable in connection with any Approved Stock Plan at a price equal to or
greater than the initial Conversion Price (as defined in the Grid Note), up to a
maximum of five percent (5%) of the outstanding Common Stock, in the aggregate
(provided that no such options shall be issued to consultants or advisors unless
such options are not registered, either at the time of issuance or at any time
thereafter, and are subject to volume limitations under Rule 144).

“Grid Note” shall mean the Senior Secured Grid Note Due October 1, 2010 issued
to the Buyers pursuant to this Agreement.

“Indebtedness” of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services including (without limitation)
“Capital Leases” in accordance with generally accepted accounting principles
(other than trade payables entered into in the ordinary course of business,
consistent with prior practice), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including 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 though 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, in connection with generally
accepted accounting principles, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness referred to in
clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, lien, pledge, charge, security interest or other encumbrance upon
or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; and (y) "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 the 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.

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“Inactive Subsidiaries” shall mean ICP Asia Ltd., a Hong Kong corporation, and
ICP Global Tech PTY Ltd., an Australian corporation.

“Intellectual Property” shall have the meaning set forth in Section 3(j) below.

“Intellectual Property Security Agreement” shall have the meaning ascribed to it
in Recital “E” above.

“Intellectual Property Rights” shall have the meaning set forth in Section 3(j)
below.

 “Legend Removal Date” shall have the meaning set forth in Section 6(a).

“Lien” shall have the meaning set forth in Section 5 below.

“Limited Standstill Agreements” shall have the meaning set forth in Section 4(n)
below.

"Market Price," for any security as of any date, shall have the meaning ascribed
to it in the applicable security.

“Material Adverse Effect” shall have the meaning set forth in Section 3(a)
below.

 “Officer’s Certificate” shall have the meaning set forth in Section 8(c) below.

“Ongoing Share Reservation Requirement” shall have the meaning set forth in
Section 4(e) below.

“Options” shall have the meaning ascribed to it in the Grid Note.

“Patents” shall have the meaning set forth in Section 3(j) below.

“Payment Shares” shall mean (i) Default Shares (as defined in the Grid Note),
(ii) shares issuable upon conversion of Liquidated Damages (as defined in the
Grid Note) and other Required Cash Payments (as each is defined in the Grid
Note) into Common Stock of the Company.  The Payment Shares shall be treated as
Common Stock issuable upon conversion of the Grid Notes for all purposes hereof
and thereof and shall be subject to all of the limitations and afforded all of
the rights of the other shares of Common Stock issuable hereunder or thereunder.
 

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“Permitted Liens” shall mean: (i) Liens on equipment purchased in the ordinary
course of business, consistent with prior practice (ii) Liens subordinate to
those created by this Agreement as long as the lienholder enters into a
subordination agreement acceptable to the Buyers in their reasonable discretion,
(iii) landlords', carriers', warehousemen's, mechanics' and other similar Liens
arising by operation of law in the ordinary course of the Company's business;
provided, however, that all such Liens shall be discharged or bonded off within
sixty (60) days from the filing thereof; and (iv) Liens for taxes (excluding any
Lien imposed pursuant to any provision of ERISA) not yet due or which are being
contested in good faith by appropriate proceedings and the Company maintains
appropriate reserves in respect thereto provided that in Buyer's judgment such
Lien does not adversely affect Buyer's rights or the priority of Buyer's Lien in
the Collateral.

“Person” shall mean an individual, a limited liability company, a partnership, a
joint venture, an exempted company, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

 “Principal Market” shall have the meaning set forth in Section 4(g) below.

“Purchase Price” shall have the meaning set forth in Section 1(b)(ii) below.

“Required Holders” shall have the meaning ascribed to it in the Grid Note.

“Security Agreement” shall have the meaning ascribed to it in Recital “E” above.

“SEC Documents” shall have the meaning set forth in Section 3(g) below.

“Securities” shall have the meaning set forth in Section 2(a) below.

“Security Documents” shall mean the Security Agreement, the form of Subsidiary
Guarantee, the Intellectual Property Security Agreement and any other documents
and filing required thereunder in order to grant the Buyers a first priority
security interest in the assets of the Company and the Subsidiaries as provided
in the Security Agreement, including but not limited to all UCC-1 filing
receipts and documentation evidencing filing of liens with the United States
Patent and Trademark Office.  

 “Subsidiaries” shall have the meaning set forth in Section 3(a) below.

"Trading Day" shall mean any day on which the Common Sock is traded for any
period on the Principal Market, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded.  

“Trading Market” means the Eligible Market on which the Common Stock is listed
or quoted for trading on the date in question.

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“Transaction Documents” shall mean this Line of Credit Agreement, the Grid Note,
the Security Documents, and any other agreements delivered together with this
Agreement or in connection herewith.

“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Grid Notes or as Payment Shares.

“Variable Equity Securities” shall have the meaning set forth in Section
4(d)(ii) below.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b) if the Common Stock is not then listed or quoted for trading on a
Trading Market and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (c) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Buyers of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company.

(b)   

Closing of Purchase of Grid Notes Subject to the satisfaction or waiver of the
terms and conditions of this Agreement, on each Closing Date (as defined below),
the Company shall issue and sell to each Buyer and each Buyer, severally and not
jointly, in its sole discretion may elect to purchase from the Company Grid
Notes in the principal amount in any amount up to its Pro-Rata Percentage (as
set forth next to such Buyer’s name in the Schedule of Buyers attached hereto)
of the Maximum Aggregate Principal Amount, each at the Purchase Price (as
defined below).

(i)

Line of Credit. Buyers hereby establishes for a period extending
from the date hereof until April 1, 2010 (the "Last Closing Date"), which period
may be extended only upon the written approval of 100% of the Buyers, a
discretionary line of credit (the "Credit Line") for and on behalf of the
Company which equals up to eight hundred thousand U.S. dollars (U.S. $800,000)
in aggregate Advanced funds for all Buyers combined (“Maximum Credit Limit”).
 In connection herewith, upon the first Advance (as defined below) from each
Buyer, the Company shall execute and deliver to each Buyer a Grid Note in the
Principal Amount corresponding to the Advance, in the form attached hereto as
Exhibit "A".  All sums advanced (“Advanced”) on the Credit Line pursuant to the
terms of this Agreement (each an "Advance") shall increase the principal amount
of each Buyer's Grid Note by an amount (the “Principal Amount”) equal to the
amount Advanced divided by 0.9009, which represents the Original Issue Discount
(as defined below).   Each Buyer is under no obligation to Advance any funds
under the Credit Line and may chose to Advance, or not to Advance funds to the
Company under the Credit Line, in each Buyer’s sole discretion. For the
avoidance of doubt and notwithstanding anything to the contrary contained
herein, no Buyer shall have any obligation whatsoever to make an Advance.

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(ii)

Form of Grid Note.  The Grid Note shall be in the form annexed hereto as Exhibit
A.

(iii)

Form of Payment.  The purchase price for each Grid Note to be purchased by each
Buyer at the Closing (the "Purchase Price") shall be $ 0.9009 for each $1.00 of
principal amount of Grid Notes to be purchased by such Buyer at the Closing,
representing an original issue discount (the “Original Issue Discount”).  On or
before each Closing Date (as defined below), (A) the Buyer shall pay the
Purchase Price for the Grid Notes that the Buyer, in its sole discretion, has
elected to have issued and sold to it, by wire transfer of immediately available
funds to the Company, in accordance with the Company's written wiring
instructions, against delivery of a duly executed Grid Note having an aggregate
principal amount (the “Principal Amount”) equal to the Purchase Price divided by
0.9009 (to account for the Original Issue Discount) and, and (B) the Company
shall deliver such Grid Notes duly executed on behalf of the Company, to the
Buyer, against delivery of any portion of the Purchase Price.   In the case of
subsequent Closings with respect to a given Buyer after that Buyer’s first
Closing, the additional amount Advanced and the resultant additional Principal
Amount shall be added to the chart at the end of the Grid Note and such
additional Principal Amount shall be added to the principal amount of the Grid
Note.

 (iv)

Closing Date; Closing Deadline.  Anytime after the date hereof until the Last
Closing Deadline (as defined below), each Buyer may in its sole discretion, but
is under no obligation to, purchase any amount of Grid Notes up to an amount
such that, following such purchase, the aggregate Principal Amount of Grid Notes
held by such Buyer does not exceed Buyer’s Maximum Principal Amount, as defined
below. Subject to the satisfaction or waiver of the terms and conditions of this
Agreement, the "Closing" with respect to a Buyer shall occur when subscriber
funds representing the aggregate Purchase Price of the Grid Note being purchased
by such Buyer are transmitted by wire transfer of immediately available funds by
each Buyer to the Company, assuming that the Transaction Documents are signed by
both parties prior to or within three (3) Business Days following such
transmission.  The date of the Closing shall be referred to herein as the
“Closing Date.”  Unless otherwise mutually agreed by the parties, the last
Closing hereunder shall occur not later than April 1, 2010 (the “Last Closing
Deadline”). Each Closing contemplated by this Agreement shall occur on the
applicable Closing Date at the offices of the Company, or at such other location
as may be agreed to by the parties. For purposes hereof, “Buyer’s Maximum
Principal Amount” shall mean the Buyer’s Pro Rata Percentage (as set forth next
to such Buyer’s name in the Schedule of Buyers attached hereto) of the Maximum
Aggregate Principal Amount.  Upon the written assignment from one Buyer to
another Buyer of its right to purchase Grid Notes, such other Buyer shall be
entitled to purchase additional Grid Notes equal to the amount that the
assigning Buyer would have been entitled to purchase hereunder.

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(v)

Closing Deliveries.  Closing deliveries required hereunder shall be made to the
Buyer pursuant to Section 1(d) below. On the Closing Date, the Company will
deliver or cause to be delivered to each Buyer (the “Company Documents”):

(A)

the items required to be delivered to Buyer pursuant to   Section 8, duly
executed by the Company where so required,

(B)

a certificate ("Closing Certificate") signed by its chief executive officer or
chief financial officer (1) representing the truth and accuracy of all the
representations and warranties made by the Company contained in this Agreement,
as of the applicable Closing Date, as if such representations and warranties
were made and given on all such dates, (2) adopting the covenants and conditions
set forth in this Agreement in relation to the applicable Grid Note, and (3)
certifying that an Event of Default has not occurred,

(C)

a duly executed Grid Note in the Principal Amount, registered in the name of
such Buyer, provided that, in the case of multiple Closings with one Buyer,
subsequent Advances after the first Advance shall be evidenced on the table at
the end of the Grid Note, and signed by the Company;

(D)

Limited Standstill Agreement, duly executed by Sass Peress (as defined in
Section 4(n)),

On the Closing Date, each Buyer shall deliver or cause to be delivered to the
Company the following (the “Buyer Documents”):

(A)

this Line of Credit Agreement duly executed by such Buyer (as to the first
Closing only), and

(B)

the applicable Purchase Price for the amount of Grid Notes that the Buyer elects
to purchase, by wire transfer to the account as specified in writing by the
Company (in the case of the Lead Investor, subject to offsets for the Lead
Investor Fee).

2.       

BUYER’S REPRESENTATIONS AND WARRANTIES. The Buyer represents and warrants to the
Company solely as to such Buyer that:

(a)  

Investment Purpose. As of the date hereof, the Buyer is purchasing the Grid Note
and the shares of Common Stock issuable upon conversion of the Grid Note or
otherwise pursuant to the Grid Note and the other Transaction Documents
(including, without limitation, the Payment Shares) (such shares of Common Stock
being collectively referred to herein as the “Conversion Shares") for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; PROVIDED, HOWEVER, that by making the representations herein, the
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act and applicable state securities laws.  

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(b)   

Accredited Investor Status. The Buyer is an "accredited investor" as that term
is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act (an
"Accredited Investor").  

(c)   

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

(d)   

Information. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by the Buyer or its advisors. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect Buyer's right to
rely on the Company's representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Securities involves a
significant degree of risk.

(e)    

Transfer Or Re-Sale. The Buyer understands that the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred or
resold unless (a) the Buyer shall have delivered to the Company an opinion of
counsel (which opinion shall be in form, substance and scope reasonably
satisfactory to counsel 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, (b) the Securities are sold or transferred to an "affiliate"
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule)
("Rule 144") of the Buyer who agrees to sell or otherwise transfer the
Securities only in accordance with this Section 2(e) and who is an Accredited
Investor, or (c) the Securities are sold pursuant to Rule 144 or Rule 144; and
 any sale of such Securities made in reliance on Rule 144 or Rule 144 may be
made only in accordance with the terms of said Rule. Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may
be pledged as collateral in connection with a bona fide margin account or other
lending arrangement.

(f)    

Organization; Authorization; Enforcement. Buyer is a duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized.  Buyer has all requisite power and authority to enter into and
perform this Agreement and the other Transaction Documents to which Buyer is a
signatory and to consummate the transactions contemplated hereby and thereby in
accordance with the terms hereof and thereof.  The execution and delivery of
this Agreement and the other Transaction Documents to which Buyer is a signatory
have been duly and validly authorized and no further consent or authorization of
Buyer, its manager or members is required. This Agreement has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes, and upon
execution and delivery by the Buyer of the other Transaction Documents to which
Buyer is a signatory, such agreements will constitute, legal, valid and binding
agreements of the Buyer enforceable in accordance with their 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.

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(g)    

Residency. The Buyer’s residency is as indicated on its signature page hereto.

(h)   

Knowledge And Experience.  Buyer has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the investment in the Securities.

(i)    

Short Sales Prior To The Date Hereof.   Buyer and its Affiliates have not from
the time that such Buyer first received a term sheet (written or oral) from the
Company or any other person setting forth the material terms of the transactions
contemplated hereunder until the date hereof entered into or effected, or
attempted to induce any third party to enter into or effect, any short sales of
the Common Stock, or any hedging transaction which establishes a net short
position with respect to the Common Stock.  

 (j)   

Independent Investment Decision.  Such Buyer has independently evaluated the
merits of its decision to purchase the Securities pursuant to the Transaction
Documents, and such Buyer confirms that it has not relied on the advice of any
other Buyer's business and/or legal counsel in making such decision.  

3.  

REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to each Buyer that, except as set forth on the Company’s disclosure
schedules referred to herein and attached hereto or any update thereto prior to
the Closing Date (collectively, the “Disclosure Schedules”):

(a)   

Organization And Qualification. The Company and each of its Active Subsidiaries
(as defined below), if any, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other) to own, lease,
use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted.  Schedule 3(a) sets forth a list of
all of the Subsidiaries of the Company, their principal corporate address, and
the jurisdiction in which each is incorporated. The Company and each of its
Active Subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which its ownership or use of
property or the nature of the business conducted by it makes such qualification
necessary except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect. "Material Adverse Effect" means any material
adverse effect on (i) the Securities, (ii) the business, operations, assets,
financial condition or prospects of the Company and its Active Subsidiaries, if
any, taken as a whole, (iii) on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith or (iv) the
authority or the ability of the Company to perform its obligations under this
Agreement or the Grid Note. "Subsidiaries" means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns,
directly or indirectly, any equity or other ownership interest.  Neither of the
Inactive Subsidiaries currently has any assets.

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(b)  

Authorization; Enforcement. (i) The Company has all requisite corporate power
and authority to enter into and perform this Agreement, the Security Documents,
and the Grid Note and to consummate the transactions contemplated hereby and
thereby and to issue the Securities, in accordance with the terms hereof and
thereof, (ii) except as otherwise set forth in Schedule 3(b), the execution and
delivery of this Agreement, the Security Documents and  the Grid Note by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Grid Note and the
issuance and reservation for issuance of the Conversion Shares issuable upon
conversion of or otherwise pursuant to the Grid Note have been duly authorized
by the Company's Board of Directors and no further consent or authorization of
the Company, its Board of Directors, or its stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company, and (iv) this
Agreement constitutes, and upon execution and delivery by the Company of the
Security Documents and  the Grid Note, each of such agreements and instruments
will constitute, a legal, 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.

(c)    

Capitalization.  As of the date hereof, the authorized capital stock of the
Company consists of 200,000,000 shares of Common Stock, of which approximately
43,706,615 shares are outstanding as of the date hereof and 100,000,000 shares
of preferred stock, par value $0.00001 per share, of which none are outstanding
as of the date hereof.  There are no outstanding securities which are
convertible into 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, except as disclosed on Schedule 3(c-1).  If any such
securities are listed on the Schedule 3(c-1), the number or amount of each such
outstanding convertible security and the conversion terms are set forth in said
Schedule 3(c-1).  All of such outstanding shares of capital stock set forth in
Schedule 3(c-1) are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable.

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No shares of capital stock of the Company are subject to preemptive rights or
any other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in Schedule 3(c-2), as of the effective date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exercisable or exchangeable for any
shares of capital stock of the Company or any of its Subsidiaries, or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries, (ii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
its or their securities under the 1933 Act and (iii) there are no anti-dilution
or price adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) that will be
triggered by the issuance of the Grid Note, the Conversion Shares, or the
Payment Shares. The Company has previously furnished to each Buyer true and
correct copies of the Company's and each Subsidiary’s Articles of Incorporation
as in effect on the date hereof ("Articles of Incorporation"), the Company's
By-laws, as in effect on the date hereof (the "By-Laws"), and the terms of all
securities convertible into or exercisable for Common Stock of the Company and
the material rights of the holders thereof in respect thereto. In the event that
the date of execution of this Agreement is not the Closing Date, the Company
shall provide each Buyer with a written update of this representation signed by
the Company's President and Chief Executive or Chief Financial Officer on behalf
of the Company as of the Closing Date (“Closing Bring-Down Certificate”).  No
further approval or authorization of any stockholder, the Board of Directors of
the Company 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 best knowledge of the Company, between or among any of the
Company’s stockholders.

(d)   

Issuance of Shares. Upon issuance upon conversion of the Grid Note with their
respective terms, and receipt of the exercise price therefor, the Conversion
Shares , along with any Payment Shares or any other shares issued pursuant to
the terms of the Transaction Documents, will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances and
shall not be subject to preemptive rights or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof, other than restrictions on transfer under the Transaction
Documents, applicable state and federal securities laws, or liens or
encumbrances created by or imposed by a Buyer.

(e)   

Acknowledgment of Dilution. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares upon conversion of or otherwise pursuant to the Grid Notes
.The Company further acknowledges that its obligation to issue Conversion Shares
upon conversion of or otherwise pursuant to the Grid Notes, in accordance with
this Agreement, and to otherwise issue Payment Shares or other shares of Common
Stock to the Buyer is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
stockholders of the Company. Taking the foregoing into account, the Company's
Board of Directors has determined, in its good faith business judgment, that the
issuance of the Securities hereunder and under the Grid Notes and the
consummation of the transactions contemplated hereby and thereby are in the best
interest of the Company and its stockholders.

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(f)   

No Conflicts. Except as otherwise set forth in Schedule 3(f), the execution,
delivery and performance of each of the Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares will not (i) conflict with or result in a
violation of any provision of the Certificate of Incorporation or By-laws, (ii)
trigger any resets of conversion or exercise prices in other outstanding
convertible securities, warrants or options of the Company, (iii) trigger the
issuance of securities by the Company to any third party, (iv) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, or to the knowledge
of the Company, patent, patent license or instrument to which the Company or any
of its Active Subsidiaries is a party, or (v) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its Active Subsidiaries or by which any property or asset
of the Company or any of its Active Subsidiaries is bound or affected (except,
in the case of clauses (i), (iv) and (v) above, for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Active Subsidiaries is in violation of its Articles
of Incorporation, By-laws or other organizational documents and neither the
Company nor any of its Active Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the Company or any
of its Active Subsidiaries in default) under, and neither the Company nor any of
its Active Subsidiaries has taken any action or failed to take any action that
would give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Active Subsidiaries is a party or by which any property or assets of
the Company or any of its Active Subsidiaries is bound or affected, except for
possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. The businesses of the Company and its Active
Subsidiaries, if any, are not being conducted, and shall not be conducted so
long as a Buyer owns any of the Securities, in violation of any law, ordinance
or regulation of any governmental entity, the violation of which would have a
Material Adverse Effect. Except as disclosed in Schedule 3(f) or as specifically
contemplated by this Agreement or as required under the 1933 Act, the 1934 Act
 and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement, or the Grid Notes in
accordance with the terms hereof or thereof or to issue and sell the Grid Notes
in accordance with the terms hereof and to issue the Conversion Shares upon
conversion of or otherwise pursuant to the Grid Notes. Except as disclosed in
Schedule 3(f), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the date hereof. The Company and its
Active Subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.

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(g)   

SEC Documents; Financial Statements.  Since at least the beginning of the most
recent fiscal quarter that began more than two (2) years prior to the Closing
Date, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and since at least the beginning of the most recent fiscal quarter
that began more than two (2) years prior to the Closing Date, and all exhibits
included therein and financial statements and schedules thereto and documents
(other than exhibits to such documents) incorporated by reference therein, being
hereinafter referred to herein as the "SEC Documents"). For purposes of this
Agreement, “Timely Filed” shall mean that the applicable document was filed (i)
by its original due date under the 1934 Act, or, if a request for an extension
was timely filed, (ii) by such extended due date.  True and complete copies of
the SEC Documents are available on the SEC’s internet website (www.sec.gov),
except for such exhibits and incorporated documents. Upon the request of a
Buyer, the Company will promptly provide copies of the SEC Documents to such
Buyer.  As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior to the date hereof). As of their
respective dates, the financial statements of the Company (and the Buyers
thereto) included in the 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 United States 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 not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business, consistent
with prior practice, subsequent to the date of the Company’s most recent 10-QSB
or 10-KSB and (ii) obligations under contracts and commitments incurred in the
ordinary course of business, consistent with prior practice, and not required
under generally accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company.

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(h)   

Absence of Certain Changes. Except for losses incurred in the ordinary course of
business, consistent with prior practice, that have been publicly disclosed at
least five (5) days prior to the date hereof or as set forth on Schedule 3(h)
hereof, since the date of the Company’s most recent 10-Q or 10-K, there has been
no material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries. For purposes
of this Section 3(h), the terms "Material Adverse Change" and "Material Adverse
Development" shall exclude continuing losses that are consistent with the
Company's historical losses.  Except as disclosed in Schedule 3(h), since the
date of the Company’s most recent audited financial statements contained in a
Form 10-KSB, neither the Company nor any of its Subsidiaries has

(i) 

declared or paid any dividends on its Common Stock;

(ii)

sold any assets, individually or in the aggregate, in excess of $100,000 outside
of the ordinary course of business, consistent with prior practice;

(iii)

except as set forth in Schedule 3(h), had capital expenditures, individually or
in the aggregate, in excess of $100,000;

(iv)

issued any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;

(v)

borrowed any amount or incurred or become subject to any liabilities (absolute
or contingent) except current liabilities incurred in the ordinary course of
business, consistent with prior practice, which are comparable in nature and
amount to the current liabilities incurred in the ordinary course of business,
consistent with prior practice, during the comparable portion of its prior
fiscal year, as adjusted to reflect the current nature and volume of the
Company's or such subsidiary's business;

(vi)

discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business, consistent with prior practice;

(vii)

declared or made any payment or distribution of cash or other property to
stockholders with respect to its stock, or purchased or redeemed, or made any
agreements so to purchase or redeem, any shares of its capital stock;

(viii)

sold, assigned or transferred any other tangible assets, or canceled any debts
or claims, in either case in excess of $100,000, except in the ordinary course
of business, consistent with prior practice;

(ix)

sold, assigned or transferred any patent rights, trademarks, trade names,
copyrights, trade secrets or other intangible assets or intellectual property
rights, or disclosed any proprietary confidential information to any person
except to customers in the ordinary course of business, consistent with prior
practice, or to the Purchasers or their representatives;

(x)

suffered any material losses or waived any rights of material value, whether or
not in the ordinary course of business, or suffered the loss of any material
amount of prospective business;

(xi)

made any changes in employee compensation except in the ordinary course of
business and consistent with past practices;

15

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(xii)

made capital expenditures or commitments therefor that aggregate in excess of
$100,000;

(xiii)

[omitted];

(xiv)

made charitable contributions or pledges in excess of $10,000;

(xv)

suffered any material damage, destruction or casualty loss, whether or not
covered by insurance;

(xvi)

experienced any material problems with any employee or senior management in
connection with the terms and conditions of their employment;

(xvii)

effected any two or more events of the foregoing kind which in the aggregate
would be material to the Company or its Subsidiaries; or

(xviii)

entered into an agreement, written or otherwise, to take any of the foregoing
actions.

Except as set forth in Schedule 3(h), neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so.

(i)  

Absence of Litigation.  Except as disclosed in Schedule 3(i-1), to the best
knowledge of the Company or any of its Subsidiaries, there is no action, suit,
claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to
the best knowledge of the Company or any of its Subsidiaries, threatened against
or affecting the Company or any of its Subsidiaries, or their officers or
directors in their capacity as such. Schedule 3(i-2) contains a complete list
and summary description of any known pending or threatened proceeding against or
affecting the Company or any of its Subsidiaries, without regard to whether it,
if adversely decided, would have a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing, where it, if adversely decided, would have a Material
Adverse Effect.

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(j)  

Patents, Copyrights, Etc.  All of the Company’s material patents, patent
applications, Patents (as defined below), patent rights, inventions, know-how,
trade secrets, trademarks, trademark applications, service marks, service names,
trade names and copyrights ("Intellectual Property") are set forth in Schedule
3(j-1) hereof.  The Company and its Subsidiaries own or possess adequate rights
or licenses to use all of the Intellectual property and the rights to receive
proceeds from patent licensing agreements, patent infringement litigation or
other litigation related to such intellectual property (collectively, the
“Intellectual Property Rights”). Any Liens, encumbrances or licenses that have
been granted against the Intellectual Property are listed in Schedule 3(j-2).
 Except as set forth in Schedule 3(J-2), to the best of the Company’s knowledge,
none of the Company's Intellectual Property Rights have expired or terminated,
or are expected to expire or terminate, within three years from the date of this
Agreement.  Except as otherwise set forth on Schedule 3(j-2), the Company owns
all right and title to the Intellectual Property free and clear of any Liens or
encumbrances and has not granted any licenses or rights to use any of the
Patents to any third party. The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all Intellectual Property
necessary to enable it to conduct its business as now operated, including but
not limited to the intellectual property set forth in Schedule 3(j-1) hereof
(and, except as otherwise set forth in Schedule 3(j-2) hereof, to the best of
the Company's knowledge, as presently contemplated to be operated in the
future), except for such licenses or rights the failure of which to own or
possess would not, individually or in the aggregate, have a Material Adverse
Effect; there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company's knowledge threatened, which challenges the right of
the Company or of a Subsidiary with respect to any Intellectual Property
necessary to enable it to conduct its business as now operated (and, except as
otherwise set forth in Schedule 3(j-2) hereof, to the best of the Company's
knowledge, as presently contemplated to be operated in the future), except for
actions or claims which, if adversely decided, would not have a Material Adverse
Effect; to the best of the Company's knowledge, the Company's or its
Subsidiaries' current and intended products, services and processes do not
infringe on any Intellectual Property Rights or other rights held by any person,
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.  

For purposes hereof, "Patents" means all domestic and foreign letters patent,
design patents, utility patents, industrial designs, inventions, trade secrets,
ideas, concepts, methods, techniques, processes, proprietary information,
technology, know-how, formulae, rights of publicity and other general
intangibles of like nature, now existing or hereafter acquired (including,
without limitation, all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how
and formulae described in Schedule 3(j-1) hereof), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office, or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof, in each case owned by the Company or an of its Subsidiaries.

(k)     

No Materially Adverse Contracts, Etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which to the knowledge of the
Company, has or is reasonably likely in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement, or has knowledge of a breach of any contract or agreement
to which the Company or any of its Subsidiaries is a party, either of which has
or is reasonably likely to have a Material Adverse Effect.

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(l)     

Tax Status. Except as set forth on Schedule 3(l), the Company and each of its
Subsidiaries has timely made or filed all federal, state and foreign income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. Except as set forth on Schedule 3(l), none of the Company's
tax returns is presently being audited by any taxing authority.

(m)    

Transactions With And Obligations To Affiliates.    Other than the grant of
stock options disclosed on Schedule 3(m), none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than customary employment contracts
for ordinary course 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 best knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.  Schedule
3(m) sets forth any loans, payables, payments, transactions, debt or equity
securities, or similar agreements or obligations between the Company and any
officers, directors, management or affiliates of the Company.

(n)   

Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of
arm's length purchaser, and severally, and not jointly, with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and that any statement made by each Buyer
or any of its respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to such Buyer’s purchase of the
Securities and has not been relied upon by the Company, its officers or
directors in any way. The Company further represents to each Buyer that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

(o)    

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 offers
or sales of any security or solicited any offers to buy any security under
circumstances that would require registration under the 1933 Act of the issuance
of the Securities to any Buyer. The issuance of the Securities to each Buyer
will not be integrated with any other issuance of the Company's securities
(past, current or future) for purposes of any stockholder approval provisions
applicable to the Company or its securities.

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(p)  

No Brokers.  The identity of any brokers, finders or placement agents (each, a
“Finder”) that are receiving compensation in respect to this Offering, along
with the amount of cash, warrants or other consideration that compose any
compensation to each such Finder, are disclosed in Schedule 3(p) hereto.  Other
than as set forth on Schedule 3(p), the Company has taken no action which would
give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.  The Company shall indemnify and hold harmless each of Buyer, its
employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees.

(q)   

Conduct of Business; Regulatory Permits; Compliance. The Company and each of its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "Company
Permits"), except where the failure to so possess any such Company Permits would
not have a Material Adverse Effect, and there is no action pending or, to the
best knowledge of the Company, threatened regarding suspension or cancellation
of any of the Company Permits. Neither the Company nor any of its Subsidiaries
is in conflict with, or in default or violation of, any of the Company Permits,
except for any such conflicts, defaults or violations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its Active Subsidiaries is in violation
of any term of or in default under its respective Certificates or Articles of
Incorporation or its Bylaws or their organizational charter or bylaws,
respectively. Since the beginning of the most recent fiscal quarter that began
more than two (2) years prior to the Closing Date, neither the Company nor any
of its Subsidiaries has received any notification with respect to possible
conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.    Neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit. To the best of the Company’s knowledge, neither the Company nor any of
its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.  Without limiting the generality of
the foregoing, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market, except for possible violations which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, and has no knowledge of any facts or circumstances that
would reasonably lead to delisting or suspension of the Common Stock by its
Principal Market in the foreseeable future.  

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(r)   

Title To Property. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all Liens, encumbrances and
defects except such as are described in Schedule 3(r) or such as would not have
a Material Adverse Effect. Any real property and facilities held under lease by
the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as would not have a Material Adverse
Effect.                  

(s)   

Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries,
nor, to the knowledge of the Company, any director, officer, agent, employee or
other person acting on behalf of the Company or any Subsidiary has, in the
course of his actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

(t)

Solvency. The Company and its Subsidiaries, individually and on a consolidated
basis, are not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below) and currently the Company has no information that would lead
it to reasonably conclude that the Company or any subsidiary would not have the
ability to, nor does it intend to take any action that would impair its ability
to, pay its debts from time to time incurred in connection therewith as such
debts mature. Except as disclosed in Schedule 3(t), the Company did not receive
a qualified opinion from its auditors with respect to its most recent fiscal
year end and does not anticipate or know of any basis upon which its auditors
might issue a qualified opinion in respect of its current fiscal year. For
purposes of this Section 3(t), “Insolvent” means (i) the present fair saleable
value of the Company’s assets is less than the amount required to pay the
Company’s total Indebtedness, (ii) the Company is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.

(u)

No Investment Company. The Company is not, and upon the issuance and sale of the
Securities as contemplated by this Agreement will not be, an "investment
company" required to be registered under the Investment Company Act of 1940 (an
"Investment Company"). The Company is not controlled by an Investment Company.

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( v)

 No Undisclosed Liabilities. The Company has no liabilities or obligations which
are material, individually or in the aggregate, other than those incurred in the
ordinary course of the Company's businesses which have been disclosed in the
Company’s public filings and which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect other than as set forth
in Schedule 3(v).

(w)

No Disagreements With Accountants And Lawyers. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company or any
Subsidiary to arise, between the Company or any Subsidiary and the accountants
and lawyers formerly or presently employed by the Company or any Subsidiary,
including but not limited to disputes or conflicts over payment owed to such
accountants and lawyers.  

(x)   

Company Acknowledgment.  The Company hereby acknowledges that each Buyer may
elect to hold its Grid Note for various periods of time, as permitted by the
terms of the Transaction Documents and the Company further acknowledges that
Buyer has made no representations or warranties, either written or oral, as to
how long the Securities will be held by such Buyer or regarding Buyer’s trading
history or investment strategies other than as provided in Section 2 of this
Agreement.

(y)    

Disclosure. The Company confirms that neither it nor any other Person acting on
its behalf has provided any of the Buyers or their agents or counsel with any
information that constitutes material, nonpublic information concerning the
Company or its Subsidiaries other than the existence of the transactions
contemplated by this Agreement or the other Transaction Documents. The Company
understands and confirms that  the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Buyers regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company is true and correct in all material
respects 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 the light of the circumstances under which they were made, not misleading.
Each press release issued by the Company or any of its Subsidiaries during the
twelve (12) months preceding the date of this Agreement did not at the time of
release 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 the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed, or that would be required to be disclosed by the Company or any
Subsidiary under applicable securities laws on a registration statement on Form
S-1 or any other appropriate form filed with the SEC relating to an issuance and
sale by the Company of its Common Stock, but which has not been so disclosed, in
each case other than the transactions contemplated by this Agreement and by the
other Transaction Documents.

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(z)   

Absence of Certain Company Control Person Actions or Events.  To the Company’s
knowledge, during the past five (5) years:

(i)

No petition under the federal bankruptcy laws or any state insolvency law was
filed by or against, and no receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such Company Control Person
(as defined below), or any partnership in which he was a general partner at or
within two years before the time of such filing, or any corporation or business
association of which he was an executive officer at or within two years before
the time of such filing;

(ii)

No 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);

(iii)

No Company Control Person has, to the Company’s knowledge, been the subject of
any order, judgment or decree, that was not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him 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)

No Company Control Person has been 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 paragraph (3) of this item, or to be associated with Persons
engaged in any such activity; or

(v)

No 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.

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For purposes hereof, “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.

(aa)     

DTC Status. The Company's transfer agent is a participant in and the Common
Stock is eligible for transfer pursuant to the Depository Trust Company
Automated Securities Transfer Program. The name, address, telephone number, fax
number, contact person and email address of the Company transfer agent is set
forth on Schedule 3(aa) hereto.

(bb)    

Sarbanes-Oxley; Internal Accounting Controls.  Except as disclosed in Schedule
3(bb), the Company is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.

(cc)    

Seniority.  Except as set forth on Schedule 3(cc), as of the Closing Date, no
indebtedness or other equity of the Company is senior to or pari passu with the
Grid Notes in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.

(dd)    

Off Balance Sheet Arrangements.  There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its SEC
Documents and is not so disclosed or that otherwise would be reasonably likely
to have a Material Adverse Effect.

(ee)

Conduct of Business.  Neither the Company nor any of its Active Subsidiaries is
in violation of any term of or in default under its Articles of Incorporation,
Bylaws or their organizational charter or bylaws, respectively. Except as
disclosed in Schedule 3(ee), neither the Company nor any of its Subsidiaries is
in violation of any judgment, decree or order to its knowledge, any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing, except for possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect.  Without
limiting the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Principal Market other than
violations which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect and has no knowledge of any facts
or circumstances which would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future.  Except as
disclosed on Schedule 3(ee) since at least January 1, 2007 , (i) the Common
Stock has been designated for quotation on the Principal Market, (ii) trading in
the Common Stock has not been suspended by the SEC or the Principal Market and
(iii) the Company has received no communication, written or oral, from the SEC
or the Principal Market regarding the suspension or delisting of the Common
Stock from the Principal Market, and the Company has not received any letters of
inquiry from the SEC Division of Enforcement or state securities regulators in
the past 24 months related to any potential or alleged violation of state or
federal securities laws.  The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.

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 (ff)   

Obligations to Issue Additional Securities.   Except as set forth in Schedule
3(ff), there are no outstanding debt or equity securities, warrants or options,
or Common Stock Equivalents, and all contractual agreements of the Company, in
each case, that contain any provisions (“Triggering Provisions”) that could
require the adjustment to conversion or exercise prices of existing securities,
or the issuance of additional securities triggered as a result of the issuance
of securities by the Company or by the passage of time on or after the date of
this Line of Credit Agreement.

(gg)

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 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 agent in connection with the
placement of the Securities.

4.

COVENANTS.  Notwithstanding anything to the contrary herein, with respect to the
covenants in this sections applicable to the Company: the Company’s obligations
to follow such covenants shall continue until such time as less than 20% of the
principal amount of Grid Note issued in the Offering remain outstanding; and,
any or all of such covenants may be waived by the written consent of the
Required Holders (as defined in the Grid Note).

(a)   

Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing. The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is necessary to
qualify the Securities for sale to the Buyer at the Closing pursuant to this
Agreement under applicable securities or "blue sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and , to the
extent any such actions are required to be taken on or prior to the Closing
Date, shall provide evidence of any such action so taken to each Buyer on or
prior to the Closing Date.

(b)  

Reporting Status. The Company's Common Stock is registered under Section 12(b)
or 12(g) of the 1934 Act. So long as any Buyer beneficially owns any of the
Securities, the Company shall timely file all SEC Documents required to be filed
with the SEC pursuant to the 1934 Act, and the Company 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.

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(c)

Advances; Use of Proceeds.   

(i)

In order to request an Advance from Buyers, the Company shall present the Buyers
with a Wire Transfer Request attached herewith as Exhibit C, requesting Buyers
to wire an amount (the “Requested Amount”) of the Offering Proceeds directly to
one or more of the Company’s suppliers of  inventory for the Company (each, a
“Supplier”), as identified by the Company.  The aggregate Requested Amount
requested from all Buyers shall not exceed the amount that the Company owes to
the Supplier for inventory previously provided or to be provided to the Company
within the subsequent 30 days.  Following receipt of a Wire Transfer Request,
subject to the Buyer Limit (as defined below) the Buyer may wire any amount up
to the Requested Amount to the specified Supplier, on the Company’s behalf,
pursuant to the instructions provided by the Company, and any such amounts shall
be considered as an Advance of Offering Proceeds by the Buyer to the Company.

(ii)

Subject to the Buyer Limit, each Buyer, at its option in its sole and absolute
discretion, may Advance additional amounts under this Agreement in excess of the
Requested Amount by either (a) wiring any amount up to the remaining Buyer Limit
to a Supplier, on the Company’s behalf, pursuant to the instructions provided by
the Company, and any such amounts shall be considered as an Advance of Offering
Proceeds by the Buyer to the Company, or (b) wiring any amount up to the
remaining Buyer Limit to directly to the Company.

(iii)

No Buyer may make Advances in excess of its Pro-Rata Percentage (as set forth
next to such Buyer’s name in the Schedule of Buyers attached hereto) of the
Maximum Aggregate Principal Amount (the “Buyer Limit”) provided that upon the
written assignment by   one Buyer (the “Assigning Buyer”) of its Buyer Limit to
another Buyer, such other Buyer may make additional advances beyond its original
Buyer Limit under the Buyer Limit of the Assigning Buyer.

(iv)

All sums Advanced by the Buyers hereunder (the “Offering Proceeds”) shall be
used by the Company solely for the purchase of inventory for the Company
(“Allowed Use of Proceeds”).  Any funds Advanced directly to the Company shall
be immediately paid to a Supplier for the purchase of inventory until all
Suppliers are brought current and, then shall be used for any other outstanding
payables until there are no remaining payables outstanding.  

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(d)

Securities Issuance Restrictions; Capital Raising Limitations; Right of
Participation.

(i)  

Capital Raising Limitations.  During the period from the date hereof and for so
long as any Grid Note remains outstanding, the Company shall not issue, or agree
to issue, Common Stock of the Company or options to purchase Common Stock of the
Company to any officers, directors, management or affiliates of the Company,
unless such issuance is an Exempt Issuance.  In addition, during the period from
the date hereof and for so long as any Grid Note remains outstanding,
notwithstanding whether or not an issuance of securities is an Exempt Issuance,
the Company shall not issue or sell, or agree to issue or sell Variable Equity
Securities (as defined below)(the “Variable Equity Securities Lock-Up”), without
obtaining the prior written approval of each of the Buyers, with the exception
of any such agreements or transactions that (x) exist as of the date hereof and
(y) are not amended or modified after the date hereof.  For purposes hereof, the
following shall be collectively referred to herein as, the “Variable Equity
Securities”: (A) any debt or equity securities which are convertible into,
exercisable or exchangeable for, or carry the right to receive additional shares
of Common Stock either (1) at any conversion, exercise or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for Common Stock at any time after the initial issuance of such debt or equity
security, or (2) with a fixed conversion, exercise or exchange price that is
subject to being reset at some future date at any time after the initial
issuance of such debt or equity security due to a change in the market price of
the Company’s Common Stock since date of initial issuance, or (B) any amortizing
convertible security which amortizes prior to its maturity date, where the
Company is required to or has the option to (or the investor in such transaction
has the option to require the Company to) make such amortization payments in
shares of Common Stock (whether or not such payments in stock are subject to
certain equity conditions), or (C) any transaction involving a written agreement
between the Company and an investor or underwriter whereby the Company has the
right to “put” its securities to the investor or underwriter over an agreed
period of time and at an agreed price or price formula (each, an “Equity Line”
transaction) or (D) any common stock that is accompanied by a number of warrants
greater than the number of warrants greater than the number of shares of common
stock sold by the Company in such transaction, or (E) any note, debenture or
other debt obligation that is accompanied by shares of Common Stock for which
the additional consideration paid per share of Common Stock is less than 90% of
the Market Price at the time of closing.  For purposes of the above, the “Market
Price” at time of closing shall mean the Market Price, as defined in the Grid
Notes.

It is expressly agreed and understood that the Variable Equity Securities
Lock-Up shall apply in respect of an Exempt Issuance and that no issuance of
Variable Equity Securities shall be an Exempt Issuance.  

(ii)  

Additional Grid Note; Dilutive Issuances.

 For long as any Grid Notes remain outstanding, the Company shall not, in any
manner, enter into or affect any Dilutive Issuance (as defined in the Grid
Notes) if the effect of such Dilutive Issuance is to cause the Company to be
required to issue upon conversion of any Grid Note without breaching the
Company's obligations under the rules or regulations of the Principal Market or
any applicable Eligible Market.

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(iii)  

Buyers’ Right of Participation in Future Financings.

(A)

From the date hereof and during the period that any amount of any Grid Note is
outstanding, upon any financing by the Company or any of its subsidiaries (each,
a “Subsequent Financing”) of Common Stock or Common Stock Equivalents (as
defined in Section 1(a)), excluding any securities issued pursuant to the
Offering described in this Agreement, each Buyer shall have the right to
participate (the “Buyer’s Right of Participation”) in up to the Buyer’s
Participation Maximum (as defined below) of the Subsequent Financing, provided
that any securities issued to the Buyer hereunder, and any securities issuable
pursuant to the conversion or exercise of such securities, shall be subject to
the Beneficial Ownership Limitation.

(B)

At least ten (10) days prior to the closing of the Subsequent Financing, the
Company shall deliver to each Buyer a written notice of its intention to effect
a Subsequent Financing (an “Advance Notice of Financing”), which Advance Notice
of Financing shall ask such Buyer if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing Notice”).  Upon the
request of a Buyer, and only upon a request by such Buyer, for a Subsequent
Financing Notice, the Company shall promptly, but no later than one (1) Trading
Day after such request, deliver a Subsequent Financing Notice to such Buyer.
 The Subsequent Financing Notice shall describe in reasonable detail the
proposed terms of such Subsequent Financing, the amount of proceeds intended to
be raised thereunder, the Person with whom such Subsequent Financing is proposed
to be effected, and attached to which shall be a term sheet or similar document
relating thereto and complete, definitive legal documentation (“Legal
Documents”) for the proposed Subsequent Financing.    

(C)

Any Buyer desiring to participate in such Subsequent Financing must provide
written notice (“Participation Notice”) to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after such Buyer has
received the Advance Notice of Financing that the Buyer is willing to
participate in the Subsequent Financing, the amount of the Buyer’s
participation, and that the Buyer has such funds ready, willing, and available
for investment on the terms set forth in the Subsequent Financing Notice.  If
the Company receives no notice from a Buyer as of such fifth (5th) Trading Day,
such Buyer shall be deemed to have notified the Company that it does not elect
to participate.  Buyer shall not be obligated to participate in a Subsequent
Offering after delivering a Participation Notice to the Company until after the
Buyer has reviewed and agreed to the final Legal Documents for such offering.

(D)

If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of
the requesting Buyers have received the Advance Notice of Financing,
notifications by the Buyers of their willingness to participate in the
Subsequent Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing, then the
Company may effect the remaining portion of such Subsequent Financing on the
terms and to the Persons set forth in the Subsequent Financing Notice.  

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(E)

If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of
the Buyers have received the Advance Notice of Financing, the Company receives
responses to a Subsequent Financing Notice from Buyers seeking to purchase more
than the aggregate amount of the Subsequent Financing, each such Buyer shall
have the right to purchase up to (the “Buyer’s Participation Maximum”) (a) their
Pro Rata Portion (as defined below) of the Subsequent Financing, plus (b) a pro
rata amount (based upon the relative amount of the participating Buyers’
respective Pro Rata Portions) of the aggregate of the unused Pro Rata Portions
of the other Buyers.   For purposes hereof, “Pro Rata Portion” shall mean the
percentage listed next to each Buyer’s name on the Schedule of Buyers attached
hereto.

(F)  

For purposes of clarity, in the event that there is any amount of a Subsequent
Financing that is not requested to be purchased by a Buyer, then any other Buyer
shall have the right to purchase such remaining amount of the Subsequent
Financing.

(G)

The Company must provide the Buyers with a second Subsequent Financing Notice,
and the Buyers will again have the right of participation set forth above in
this Section 4(d)(iii), if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.

(H)  

The Company and the Buyers agree that if any Buyer elects to participate in the
Subsequent Financing, (x) neither the agreement regarding the Subsequent
Financing (the "Subsequent Placement Agreement") with respect to such Subsequent
Financing nor any other transaction documents related thereto (collectively, the
"Subsequent Placement Documents") shall include any term or provisions whereby
any Buyer shall be required to agree to any restrictions in trading as to any
securities of the Company owned by such Buyer prior to such Subsequent
Financing, and (y) the Buyers shall be entitled to the same registration rights,
if any, provided to other investors in the Subsequent Placement.

(iv)  

Most Favored Nation (MFN) Securities Exchange Provision.  From the date hereof
until the date when such Buyer holds less than 20% in principal amount of Grid
Notes originally purchased by such Buyer hereunder, if the Company effects a
Subsequent Financing, each Buyer may elect, in its sole discretion, to exchange
(an “MFN Exchange”) all or some of the Grid Notes then held by such Buyer for
any securities or units issued in a Subsequent Financing on a $1.00 for $1.00
basis based on the outstanding principal amount of such Grid Notes, along with
any liquidated damages and other amounts owing thereon, and the effective price
at which such securities were sold in such Subsequent Financing; PROVIDED,
HOWEVER, that this Section 4(d)(iv) shall not apply with respect to (a) an
Exempt Issuance or (b) a firm commitment underwritten public offering of Common
Stock with a reputable national underwriter. The Company shall provide each
Buyer with notice of any such Subsequent Financing in the manner set forth in
Section 4(d)(iii).  Following such an exchange, the Holder shall receive any
warrants, options or other ancillary securities that normally accompany the
securities being purchased and sold in the Subsequent Financing.  

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(v)  

Injunctive Relief.   The remedies provided in this Agreement shall be cumulative
and in addition to all other remedies available under this Agreement and any of
the other Transaction Documents at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the Holder's right to pursue actual and consequential damages for any
failure by the Company to comply with the terms of this Agreement or any of the
Transaction Documents.  The Company acknowledges that a breach by it of its
obligations under this Agreement or the other Transaction Documents, including
but not limited to a breach of its obligations under this Subsection 4(d)
hereof, will cause irreparable harm to each Buyer, by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement or the other Transaction Documents, including but not limited to a
breach of its obligations under this Subsection 4(d) hereof, will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Agreement or the other Transaction Documents, that each Buyer
shall be entitled, in addition to all other available remedies in law or in
equity, to an injunction or injunctions to prevent or cure any breaches of the
provisions of this Agreement or the other Transaction Documents, including but
not limited to a breach of its obligations under this Subsection 4(d) hereof,
and to enforce specifically the terms and provisions of this Agreement and the
other Transaction Documents, including but not limited to its obligations under
this Subsection 4(d), without the necessity of showing economic loss and without
any bond or other security being required.  Specifically, the Buyer shall be
entitled to injunctive relief to cause the court to rescind any financing or
financings or other transactions between the Company and a third party that are
in violation of this Subsection 4(d).

(e)

  Authorization And Reservation of Shares.

(i)  

Authorization and Reservation Requirements. The Company represents that it has
at least 200,000,000 authorized shares of Common Stock and covenants that it
will initially reserve (the “Initial Share Reservation”) from its authorized and
unissued Common Stock a number of shares of Common Stock equal to at least 150%
of the Original Principal Amount of the Grid Notes, divided by the Conversion
Price in effect on the date of the Initial Share Reservation, free from
preemptive rights, to provide for the issuance of Common Stock upon the
conversion of the Grid Notes.  The Company further covenants that, beginning on
the date hereof, and continuing throughout the period that any Grid Notes remain
outstanding, the Company shall at all times have authorized, and reserved
(together with the Initial Share Reservation Requirement, collectively referred
to as the “Ongoing Share Reservation Requirement”) for the purpose of issuance,
a sufficient number of shares of Common Stock to provide for the full conversion
or exercise of the outstanding portion of the Grid Notes and issuance of the
Conversion Shares in connection therewith (based on the Conversion Price (as
defined in the Grid Notes) in effect from time to time. The Company shall not
reduce the number of shares of Common Stock reserved for issuance upon
conversion of or otherwise pursuant to the Grid Notes without the consent of the
Buyer. The Company shall at all times maintain the number of shares of Common
Stock so reserved for issuance at no less than 100% of the number that is then
actually issuable upon full conversion of the Grid Notes (based on the
Conversion Price (as defined in the Grid Notes) in effect from time to time)
(without regard to any limitations on the number of shares issuable upon the
Conversion of the Grid Notes).

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(ii)  

Stockholder Approval.  If at any time the number of shares of Common Stock
authorized and reserved for issuance is below 100% of the number of Conversion
Shares issued and issuable upon conversion of or otherwise pursuant to the Grid
Notes (based on the Conversion Price (as defined in the Grid Notes) in effect
from time to time), together with the Payment Shares and any other shares of
Common Stock issued or issuable pursuant to the terms of the Transaction
Documents, the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company's obligations under this Section 4(e), in the case of
an insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of shares.

(f)   

Acknowledgment Regarding Purchasers’ Trading Activity.  Notwithstanding anything
in this Agreement or elsewhere herein to the contrary, it is understood and
acknowledged by the Company that (i) none of the Purchasers has been asked to
agree by the Company, nor has any Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by
any Purchaser, specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities, (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Common Stock, and (iv)
each Purchaser shall not be deemed to have any affiliation with or control over
any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (a) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Underlying Shares deliverable with respect to Securities are being
determined and (b) such hedging activities (if any) could reduce the value of
the existing stockholders' equity interests in the Company at and after the time
that the hedging activities are being conducted.  The Company acknowledges that
such aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

(g)    

Listing.  The Company will use its best efforts to obtain and, so long as any
Buyer owns any of the Securities, maintain the listing and trading of its Common
Stock on an Eligible Market (whichever Eligible Market is at the time the
principal trading exchange or market for the Common Stock is referred to herein
as the "Principal Market"), and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as
applicable. The Company shall promptly provide to Buyer copies of any notices it
receives from the Principal Market and any other exchanges or quotation systems
on which the Common Stock is then listed regarding the continued eligibility of
the Common Stock for listing on such exchanges and quotation systems.

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(h)

Corporate Existence. So long as a Buyer beneficially owns any portion of the
Grid Notes, the Company shall maintain its corporate existence in good standing
and remain a “Reporting Issuer” (defined as a Company which files periodic
reports under the 1934 Act).

(i)

No Integration. The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the 1933 Act) that would be integrated with the offer or sale of the
Securities to the Buyers in a manner that would require the registration under
the 1933 Act of the sale of the Securities to the Buyers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market, except where such integration (i) will
not adversely affect the private offering exemption from registration for this
Offering or change the deemed date of Closing of this Offering, (ii) will not
cause the Rule 144 holding period for any of the Securities issued or issuable
to the Buyers to be delayed or extended and, (iii) will not otherwise adversely
affect the Buyers or the Securities issuable hereunder.

 (j)

Limitation on Sale or Disposition of Intellectual Property.   So long as any
portion of the Grid Notes remain outstanding, so long as the Company shall have
any obligation under the Grid Notes remains outstanding, the Corporation shall
not sell, convey, dispose of, spin off or assign any or all of its Intellectual
Property (including but not limited to the Intellectual Property set forth in
Schedules 3(j)(1) and (2) hereof), or any of the Intellectual Property Rights,
in each case without Buyer’s written consent, provided that the Company may,
without the Buyer’s written consent, enter into one or more licensing agreements
with respect to its Intellectual Property so long as such licensing agreements
exceed $5 million per calendar year and so long as such agreements are not with
any affiliate (as such term is defined in Rule 501(b) of Regulation D) of the
Company or with any relative of, or entity controlled by, or any entity 10% or
more of which is owned by, any officer, director, employee or former employee of
the Company, provided, further, that the Company shall not be subject to the
restrictions of this Section 4(j) if the cash consideration received by the
Company in exchange for such Intellectual Property Rights exceeds $50 million.  

(k)

Limitation On Rate of Issuance of Shares.     The parties agree that, if by
virtue of this AGREEMENT, or by virtue of any other agreement between the
parties, Holder becomes entitled to receive from the Company a number of shares
of Common Stock of the Company (collectively, “Issuable Securities”), such that
the sum of (1) the number of shares of Common Stock of the Company beneficially
owned by Holder and any applicable affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the unconverted
portion of the Grid Note, or the unexercised or unconverted portion of any other
security of Holder subject to a limitation on conversion or exercise analogous
to the limitations contained herein)(collectively, the “Beneficially Owned
Shares”) and (2) the number Issuable Securities described above, with respect to
which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% (the
“Maximum Percentage”) of the outstanding shares of Common Stock (the “Beneficial
Ownership Limitation”), then the Company, following the receipt of written
instructions from the Holder as to the number of shares of Common Stock that can
be so issued, shall immediately deliver to Holder the number of shares of Common
Stock of the Company, that can be issued without exceeding the Beneficial
Ownership Limitation, and the Company shall not issue shares of Common Stock to
the Buyer in excess of the Beneficial Ownership Limitation.

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For purposes of the proviso to the immediately preceding sentence, (i)
beneficial ownership shall be determined by the Holder in accordance with
Section 13(d) of the 1934 Act and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso to the immediately preceding
sentence, and PROVIDED THAT the Beneficial Ownership Limitation shall be
conclusively satisfied if the applicable notice from Holder includes a signed
representation by the Holder that the issuance of the shares in such notice will
not violate the Beneficial Ownership Limitation, and the Company shall not be
entitled to require additional documentation of such satisfaction.

The parties agree that, in the event that the Company receives any tender offer
or any offer to enter into a merger with another entity whereby the Company
shall not be the surviving entity (an “Offer”), or in the event the Company is
issuing Default Shares (as defined in the Grid Note) to the Buyer, then “4.99%”
shall be automatically revised immediately after such offer to read “9.99%” each
place it occurs in the first two paragraphs of this Section 4(n) above.
 Notwithstanding the above, Holder shall retain the option to either exercise or
not exercise its option(s) to acquire Common Stock pursuant to the terms hereof
after an Offer.  In addition, the Beneficial Ownership Limitation provisions of
this Section 4(k) may be waived by such Holder, at the election of such Holder,
upon not less than sixty-one (61) days’ prior notice to the Company, to change
the Beneficial Ownership Limitation to any other percentage not less than 4.99%
and not in excess of 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock upon conversion of the Grid Note held by the Holder as applicable, and the
provisions of this Section 4(k) shall continue to apply, provided that, if an
Event of Default occurs under the Grid Note, thereafter the Beneficial Ownership
Limitation provisions of this section may be waived by such Holder, at the
election of such Holder, upon not less than sixty-one (61) days’ prior notice to
the Company, to change the Maximum Percentage to any other percentage not less
than 4.99% (and not limited to 9.99%) of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock upon conversion of this Grid Note held by the Holder and the
provisions of this section shall continue to apply.  The limitations on
conversion set forth in this subsection are referred to as the “Beneficial
Ownership Limitation.”  Upon such a change by a Holder of the Beneficial
Ownership Limitation from such 4.99% Beneficial Ownership Limitation to such
9.99% limitation, the Beneficial Ownership Limitation may not be further waived
by such Holder.  

The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(k) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation.

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Maximum Exercise of Rights. In the event the Buyer notifies the Company in
writing that the exercise of the rights described herein, or the issuance of
Payment Shares or other shares of Common Stock issuable to the Holder under the
terms of the Transaction Documents (collectively, “Issuable Shares”) would
result in the issuance of an amount of Common Stock of the Company that would
exceed the maximum amount that may be issued to a Buyer calculated in the manner
described in this Section 4(j) of this Agreement, then the issuance of such
additional shares of Common Stock of the Company to such Buyer will be deferred
in whole or in part until such time as such Buyer is able to beneficially own
such Common Stock without exceeding the maximum amount set forth calculated in
the manner described in herein. The determination of when such Common Stock may
be issued shall be made by each Buyer as to only such Buyer.

(l)

Equal Treatment of Buyers.  The terms of Securities issued to Buyers per the
terms of this Agreement and the Transaction Documents shall be identical in all
material respects.  In addition, neither the Company nor any of its affiliates
shall, directly or indirectly, pay or cause to be paid any consideration
(immediate or contingent), whether by way of interest, fee, payment for the
redemption, conversion of the Grid Notes, or otherwise, to any Buyer or holder
of Securities, for or as an inducement to, or in connection with the
solicitation of, any consent, waiver or amendment. of any terms or provisions of
the Transaction Documents, unless such consideration is required to be paid to
all Buyers or holders of Securities bound by such consent, waiver or amendment.
 The Company shall not, directly or indirectly, redeem any Securities unless
such offer of redemption is made pro rata to all Buyers or holders of
Securities, as the case may be, on identical terms.  For clarification purposes,
this provision constitutes a separate right granted by the Company to each Buyer
of Securities and negotiated separately by each Buyer, is intended for the
Company to treat the Buyers as a class, and shall not in any way be construed as
the Buyers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

(m)   

Legal And Due Diligence Fees.  The Company shall pay to BridgePointe Master Fund
Ltd. (the “Lead Investor”) a non-accountable cash fee of $5,000 (which shall be
paid at Closing)( the “Lead Investor’s Fee”) as reimbursement for legal services
rendered by its attorneys in connection with this Agreement and the purchase and
sale of the Grid Notes and as reimbursement for due diligence expenses.  The
Lead Investor may withhold such amount out of the Purchase Price for its Grid
Note.

(n)   

Limited Standstill. The Company will deliver to the Buyers on or before the
Closing Date and enforce the provisions of irrevocable standstill agreements
("Limited Standstill Agreements") in the form annexed hereto as Exhibit N with
Sass Peress, the Company’s President and CEO.

(o)  

Non-Public Information.  The Company covenants and agrees that from and after
the date hereof, neither it nor any other Person acting on its behalf will
knowingly provide any Buyer or its agents or counsel with any information that
constitutes material non-public information, unless prior thereto such Buyer
shall have executed a written agreement (a “Non-Public Information Agreement”)
regarding the confidentiality and use of such information.  The Company
understands and confirms that each Buyer shall be relying on the foregoing
representations in effecting transactions in securities of the Company.  In the
event that the Company, or any of its Subsidiaries, or any of its or their
respective officers, directors, employees and agents, provides any Buyer or its
agents or counsel with any information that constitutes material non-public
information without obtaining a Non-Public Information Agreement from the Buyer,
in addition to any other remedy provided herein or in the Transaction Documents,
the Company shall publicly disclose any material, non-public information in a
Form 8-K within five (5) Business Days of the date that it discloses such
information to the Buyer.  In the event that the Company discloses any material,
non-public information to the Buyer without an accompanying  Non-Public
Information Agreement and fails to publicly file a Form 8-K in accordance with
the above, a Buyer, upon three (3) Business Days advance written notice to the
Company, shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such material, nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or agents.  No Buyer
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents, for any
such disclosure.  The Company understands and confirms that each Buyer shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

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 (p)   

Inactive Subsidiaries.  For so long as any of the Grid Notes remain outstanding,
the Company shall not transfer any assets to any Inactive Subsidiary, and will
not activate any Inactive Subsidiary without the advance written permission of
the Lead Investor.

(q)

Transactions With Affiliates.  Each existing Affiliate Transaction (as defined
below) of the Company and or any Subsidiary is set forth on Schedule 4(q).  So
long as any Grid Note is outstanding, the Company shall not, and shall cause
each of its Subsidiaries not to, enter into, amend, modify or supplement, or
permit any Subsidiary to enter into, amend, modify or supplement any Affiliate
Transaction (as defined below) in each case in excess of $50,000, other than the
existing Affiliate Transactions set forth on Schedule 4(q) (for any new
Affiliate Transaction the value of which exceeds $50,000 and for any such
existing Affiliate Transaction, the value of such amendment, modification or
supplement which exceeds $50,000).  For purposes hereof, “Affiliate Transaction”
shall mean any agreement, transaction, commitment, or arrangement, 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 best 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, with any of its or any Subsidiary’s
officers, directors, employees, persons who were officers or directors at any
time during the previous two (2) years, stockholders who beneficially own five
percent (5%) or more of the Common Stock, or Affiliates (as defined below) of
any thereof, or with any individual related by blood, marriage, or adoption to
any such individual or with any entity in which any such entity or individual
owns a five percent (5%) or more beneficial interest (each a “Related Party”),
except for (i) customary employment arrangements and benefit programs on
reasonable terms and (ii) reimbursement for expenses incurred on behalf of the
Company, in each case without the permission of the Required Holders.
 “Affiliate” for purposes hereof means, with respect to any person or entity,
another person or entity that, directly or indirectly, (i) has a ten percent
(10%) or more equity interest in that person or entity, (ii) has ten percent
(10%) or more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or entity.
 “Control” or “Controls” for purposes hereof means that a person or entity has
the power, direct or indirect, to conduct or govern the policies of another
person or entity.

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(r)

Pledge of Securities.  The Company acknowledges and agrees that the Securities
may be pledged by a Buyer   in connection with a bona fide margin agreement or
other loan or financing arrangement that is secured by the Securities.  The
pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(e) hereof; provided that a
Buyer and its pledgee shall be required to comply with the provisions of Section
2(e) hereof in order to effect a sale, transfer or assignment of Securities to
such pledgee.  The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.

5.  

SECURITY; SENIOR DEBT.  The Grid Notes are secured by the Security Agreement of
the same date. Except as otherwise set forth on Schedule 5 annexed hereto, the
Company hereby represents that the Holder has a senior lien on the Collateral
(as defined in the Security Agreement), and agrees not to grant any liens on the
Collateral, except for Permitted Liens.  From the Original Issue Date (as
defined in the Grid Notes) of the Grid Notes through the date that all of the
Grid Notes have been paid in full or converted in full, will not issue nor
permit any Subsidiary to issue any securities or incur any indebtedness that is
senior to or pari passu with the Grid Notes and, before entering into any future
debt with a third party or permitting any Subsidiary to enter into any future
debt with a third party (unless the issuance of such debt is otherwise
prohibited under the terms of the Transaction Documents), the Company shall
first obtain a subordination agreement, satisfactory to Buyer, from the proposed
debt holder.  The Company agrees to take all necessary actions to assist the
Holder in perfecting the Holder’s lien on each piece of Collateral within
fifteen (15) days of the date hereof, including but not limiting to signing and
delivering the appropriate forms.  

The Company hereby represents that, to its knowledge except as otherwise set
forth on Schedule 5 annexed hereto, there are no liens or encumbrances on the
Intellectual Property (as defined in Section 3(j)) or the Collateral.  The
Company agrees that from the Original Issue Date of the Grid Notes through the
date that all of the Grid Notes have been paid in full or converted in full (the
“Covered Period”), the Company shall not enter into, create, incur, assume or
suffer to exist any mortgage, lien, pledge, charge, security interest or other
encumbrance (collectively, “Liens”) upon or in the Intellectual Property or the
Collateral owned by the Company or any of its Subsidiaries and shall not assign
or transfer any interest in the Patents owned by the Company or any of its
Subsidiaries.  In the event that the Company attempts to place any Lien or Liens
on the Intellectual Property or the Collateral or attempts to assign or transfer
any interest in the Intellectual Property or the Collateral during the Covered
Period, the Buyer shall have the right to apply for an injunction in any state
or federal courts sitting in the City of New York, borough of Manhattan to
prevent such Lien or transfer. Before entering into any future debt with a third
party, the Company shall first obtain a subordination agreement, satisfactory to
Buyer, from the proposed debt holder.  

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6.   

LEGENDS.

(a)  

The Conversion Shares, together with any other shares of Common Stock that are
issued or issuable pursuant to the Transaction Documents shall be referred to
herein as the “Issued Common Shares.”  Certificates evidencing the Issued Common
Shares shall not contain any legend restricting the transfer thereof (including
the legend set forth in Section 3(e) of the Grid Notes): (i) following any sale
of such Issued Common Shares pursuant to Rule 144, or (ii) if such Issued Common
Shares are eligible for sale under Rule 144, or (iii) if such legend is not
required under applicable requirements of the 1933 Act (including judicial
interpretations and pronouncements issued by the staff of the Commission)
(collectively, the “Unrestricted Conditions”). The Company shall cause its
counsel to issue a legal opinion to the Company’s transfer agent promptly if
required by the Company’s transfer agent to effect the issuance of Issued Common
Shares without a restrictive legend or removal of the legend hereunder. If the
Unrestricted Conditions are met at the time of issuance of Issued Common Shares,
then such Issued Common Shares shall be issued free of all legends.  The Company
agrees that at such time as the Unrestricted Conditions are met or such legend
is otherwise no longer required under this Section 6(a), it will, no later than
three (3) Trading Days following the delivery by a Buyer to the Company or the
Company’s transfer agent of a certificate representing Issued Common Shares, as
applicable, issued with a restrictive legend (such third Trading Day, the
“Legend Removal Date”), deliver, or cause the Transfer Agent to deliver at the
Company’s expense, to such Buyer a certificate representing such shares that is
free from all restrictive and other legends.  

(b)   

In addition to such Buyer’s other available remedies, the Company shall pay to a
Buyer, in cash, as partial liquidated damages and not as a penalty, for each
$1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date
such Securities are submitted to the Transfer Agent) delivered for removal of
the restrictive legend and subject to Section 6(a), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend (the “Legend Removal Failure
Liquidated Damages”).  Nothing herein shall limit such Buyer’s right to pursue
actual damages for the Company’s failure to deliver certificates representing
any Securities as required by the Transaction Documents, and such Buyer shall
have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.

(c)   

Each Buyer, severally and not jointly with the other Buyers, agrees that the
removal of the restrictive legend from certificates representing Securities as
set forth in this Section 6 is predicated upon the Company’s reliance that each
Buyer will sell any Securities pursuant to either the registration requirements
of the 1933 Act, including any applicable prospectus delivery requirements, or
an exemption therefrom, and that if Securities are sold pursuant to a
registration statement, they will be sold in compliance with the plan of
distribution set forth therein.  

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7.

CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company
hereunder to issue and sell the Grid Notes to a Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following
conditions thereto, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:

(a)   

The Buyer shall have delivered the applicable Purchase Price in accordance with
Section 1(b) above to the Company.

(b)      

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

(c)   

No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

8.

CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE. The Buyer’s  purchase of the Grid
Note at each Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for such Buyer's sole benefit and may be waived by such Buyer at any time in its
sole discretion:

(a)  

The Company shall have executed this Agreement and the Security Documents, and
delivered the same to the Buyer.

(b)  

The Company shall have delivered to such Buyer the duly executed Grid Note in
accordance with Section 1 above.

(c)  

The representations and warranties of the Company contained in this Agreement,
as modified by the Exhibits and Schedules hereto, shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at such time (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be true and
correct as of such date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer shall have received a
certificate or certificates (the “Officer’s Certificate”), executed by the
President and Chief Executive Officer of the Company, dated as of the applicable
Closing Date, to the foregoing effect and Board of Directors' resolutions
relating to the transactions contemplated hereby.

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(d)  

No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

(e)  

Trading in the Common Stock on the Principal Market shall not have been
suspended by the SEC or the Nasdaq and, within two (2) Business Days of the
Closing, the Company will make application to the Principal Market, if legally
required by Nasdaq, to have the Conversion Shares authorized for quotation.

(f)    

The Buyer shall have received a Closing Certificate described in Section
1(b)(v)(B) above, dated as of the Closing Date.

(g)   

In accordance with the terms of the Security Documents, the Company shall have
delivered to the Buyer (i) the Security Agreement signed by the Company and each
of its subsidiaries, (ii) the Subsidiary Guarantee, duly executed by each of the
Company’s Active Subsidiaries, (iii) certificates representing the Active
Subsidiaries' shares of capital stock, along with duly executed blank stock
powers, (iv) appropriate financing statements on Form UCC-1 to be duly filed in
such office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by
each Security Document and (v) the Patent Security Agreement, duly executed by
the Company.

(h)   

Prior to the Closing, the Company shall have delivered or caused to be delivered
to each Buyer (A) certified copies of UCC search results, listing all effective
financing statements which name as debtor the Company or any of its Subsidiaries
filed in the prior five (5) years to perfect an interest in any assets thereof,
together with copies of such financing statements, none of which, except as
otherwise agreed in writing by the Buyers, shall cover any of the Collateral (as
defined in the Security Documents) and the results of searches for any tax lien
and judgment lien filed against such Person or its property, which results,
except as otherwise agreed to in writing by the Buyers shall not show any such
Liens (as defined in the Security Documents); and (B) a perfection certificate,
duly completed and executed by the Company and each of its Subsidiaries, in form
and substance satisfactory to the Buyers.

(i)    

The Company shall have received funds from Buyers representing their respective
Purchase Prices not exceeding their Buyer Limit, individually and not exceeding
the Maximum Offering Amount, in an aggregate amount.

(j)   

No Material Adverse Changes have occurred since the date that the Buyer executed
this Agreement.

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9.

GOVERNING LAW; MISCELLANEOUS.

(a)

Governing Law.  All questions concerning the construction, validity, enforcement
and interpretation of this Agreement and the other Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, 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) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.  If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.  THE PARTIES HEREBY WAIVE ALL
RIGHTS TO, AND AGREES NOT TO REQUEST, A TRIAL BY JURY FOR ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR BY ANY OF THE TRANSACTION DOCUMENTS.  

(b)   

Counterparts; Signatures By Facsimile. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

(c)    

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

(d)  

Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, 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.

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(e)

  Entire Agreement; Amendments. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and supersede all previous communication,
representation, or Agreements whether oral or written, between the parties with
respect to the matters covered herein. Except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters.  The Agreement
may not be orally modified. Only a modification in writing, signed by authorized
representatives of  each party hereto will be enforceable.  The parties waive
the right to rely on any oral representations made by the other party, whether
in the past or in the future, regarding the subject matter of the Agreement, the
instruments referenced herein or any other dealings between the parties related
to investments or potential investments into the Company or any securities
transactions or potential securities transactions with the Company.

(f)

Independent Nature of Buyers’ Obligations And Rights.  The obligations of each
Buyer under any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document.  Nothing contained herein or in any Transaction Document, and no
action taken by any Buyer pursuant thereto, shall be deemed to constitute the
Buyers as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Buyers are in any way acting in concert
or as a group with respect to such obligations or the transactions contemplated
by the Transaction Documents.  Each Buyer shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose.  Each Buyer has been represented by its own
separate legal counsel in its review and negotiation of the Transaction
Documents.  

(g)

  Notices. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five (5) days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:

If to the Company, to:

Attn:  Sass Peress, CEO,  President  & Chairman
ICP Solar Technologies, Inc.
7075 Place Robert - Joncas
Montreal, H4M272
Telephone: 514-270-5770
Fax: (514) 270-3677

If to a Buyer: To the address set forth immediately below such

Buyer's name on the signature pages hereto.

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Each party shall provide notice to the other party of any change in address.

(h)

Successors And Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. Neither the Company nor
any Buyer shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing,
subject to Section 2(e), Buyer may assign, following written notice to the
Company, its rights hereunder to any person that purchases Securities in a
private transaction from a Buyer or to any of its "Affiliates," as that term is
defined under the 1934 Act, without the consent of the Company.

(i)

Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
person.

(j)   

Survival. The representations and warranties of the parties hereto contained in
this Agreement shall survive the closing hereunder for the maximum period
permitted by applicable law notwithstanding any due diligence investigation
conducted by or on behalf of the Buyer.

(k)

Indemnification.  The Company (the “Indemnifying Party”) agrees to indemnify and
hold harmless each Buyer and all its respective officers, directors, employees,
investors, agents, members and managers (the “Indemnified Party”) for any loss
or damage, including without limitation, the fees, costs, and disbursements of
legal counsel, arising as a result of or related to any breach by the Company of
any of its representations, warranties and covenants set forth in Sections 3 and
4 hereof or any of its covenants and obligations under this Agreement, including
advancement of expenses as they are incurred with respect to claims by third
parties.

Promptly after receipt of notice of the commencement of any action against an
Indemnified Party, such Indemnified Party shall notify the Indemnifying Party in
writing of the commencement thereof and the basis hereunder upon which a claim
for indemnification is asserted, but the failure to do so shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent the
Indemnifying Party is materially prejudiced by such failure. In the event of the
commencement of any such action, the Indemnifying Party shall be entitled to
participate therein and to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party, and, after notice from the Indemnifying
Party to the Indemnified Party of its election so to assume the defense thereof,
the Indemnifying Party shall not be liable to the Indemnified Party hereunder
for any legal expenses (including attorneys' fees, costs and disbursements)
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, PROVIDED, HOWEVER, that, if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the Indemnifying Party or if the interests of the Indemnified Party
reasonably may be deemed to conflict with the interests of the Indemnifying
Party, the Indemnified Party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
Indemnifying Party as incurred.

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As to cases in which the Indemnifying Party has assumed and is providing the
defense for the Indemnified Party, the control of such defense shall be vested
in the Indemnifying Party; provided that the consent of the Indemnified Party
shall be required prior to any settlement of such case or action, which consent
shall not be unreasonably withheld. As to any action, the party which is
controlling such action shall provide to the other party reasonable information
(including reasonable advance notice of all proceedings and depositions in
respect thereto) regarding the conduct of the action and the right to attend all
proceedings and depositions in respect thereto through its agents and attorneys,
and the right to discuss the action with counsel for the party controlling such
action.

(l)   

Publicity. The Company and the Buyer shall have the right to review a reasonable
period of time before issuance of any press releases, filings with the SEC,
FINRA or any stock exchange or interdealer quotation system, or any other public
statements with respect to the transactions contemplated hereby; PROVIDED,
HOWEVER, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or public filings with respect to such
transactions as is required by applicable law and regulations (although whenever
possible the Buyer shall be consulted by the Company in connection with any such
press release prior to its release and shall be provided with a copy thereof and
be given an opportunity to comment thereon). The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Buyers without the consent of the Buyers unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.

(m)

Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement, the Transaction Documents, and the consummation of
the transactions contemplated hereby and thereby.

(n)

No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party.

(o)   

Liquidated Damages.  The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

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(p)

Remedies. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to Buyer, by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Agreement, that Buyer shall be
entitled, in addition to all other available remedies in law or in equity, to
seek an injunction or injunctions to prevent or cure any breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.

(p)

Breach of Agreement.  Any breach by the Company of the agreements or covenants
in this Agreement shall constitute an Event of Default under the Grids Notes and
under the 2008 Debentures.

10.  

AMENDMENT TO 2008 DEBENTURE AND 2008 SECURITIES PURCHASE AGREEMENTS.  

(a)  

Amendment to 2008 Securities Purchase Agreements.  The definition of “Exempt
Issuance” in each of the 2008 Securities Purchase Agreements is hereby amended
to replace the words:

 “ . . .75% of the initial Conversion Price . . .”

with the words

“ . . .100% of the initial Conversion Price . . .”

(b)  

Amendments to 2008 Debentures.  

(1)

Any breach by the Company of the agreements or covenants in this Line of Credit
Agreement shall constitute an Event of Default under the 2008 Debentures.

(2)

The following words in the first sentence of Section 6 of each of the 2008
Debentures are hereby deleted:

“ . . .but excluding shares of Common Stock deemed to have been issued by the
Company in connection with an Exempt Issuance . . .”

Except as set forth in this Section 10, the terms of the 2008 Debentures and the
Initial Transaction Documents remain unamended and in full force and effect.

The undersigned acknowledges that this Agreement shall not be effective unless
accepted by the Company as indicated below.

[INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned Buyer does represent and certify under
penalty of perjury that the foregoing statements are true and correct and that
Buyer by the following signature(s) executed this Agreement.

Dated this 8th day of October, 2009.

     

Your Signature

  PRINT EXACT NAME IN WHICH YOU WANT     THE SECURITIES TO BE REGISTERED        
          Buyer’s Entity Type and Residency: _________________   .            
DELIVERY INSTRUCTIONS: Name: Please Print   Please type or print address where
your security is to be delivered             ATTN.: Title/Representative
Capacity (if applicable)                   Name of Company You Represent (if
applicable)   Street Address               Place of Execution of this Agreement
 

City, State or Province, Country, Offshore Postal Code

__________________________________________________
Phone Number (For Federal Express) and Fax Number (re: Notice)

ICP Solar Technologies, Inc.

By:________________________________

Print Name:______________________________

Title:_______________________________

 

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SCHEDULE OF BUYERS OF ICP SOLAR TECHNOLOGIES, INC. GRID NOTES

Buyer

Pro-Rata Percentage

BridgePointe Master Fund Ltd., a Cayman Islands Exempted Company

67.01%

Gemini Master Fund, Ltd., a Cayman Islands company

22.34%

Platinum Long Term Growth VI, LLC, a Cayman Islands Exempted Company

10.65%

 

 

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