NOTE AND WARRANT PURCHASE AGREEMENT

THIS NOTEAND WARRANT PURCHASE AGREEMENT, dated as of February23, 2011 (this
“Agreement”), is entered into by and between A5 LABORATORIES INC., a
Nevadacorporation (the “Company”), and JOHN M. FIFE, an individual, his
successors or assigns (the “Buyer”).

WITNESSETH:

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

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

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

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

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

“Buyer’s Counsel” means Carman LehnhofIsraelsen LLP.

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

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

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

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

“Company Counsel” means Konrad Malik.

“Company’s SEC Documents” means the Company’s filings on the SEC’s EDGAR system.

 
1

--------------------------------------------------------------------------------

 
 
“Conversion Date” means the date a Holder submits a Notice of Conversion, as
provided in the Note.

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

“Delivery Date” has the meaning ascribed to it in the Note (with respect to
Conversion Shares) or the Warrant (with respect to Warrant Shares).

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

“Last Audited Date” means June 30, 2010.

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

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

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

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

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

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

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

“State of Incorporation” means Nevada.

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

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

“Transaction Documents” means this Agreement, the Notes,the Security Agreement
(defined below), the Pledge Agreement (defined below), the Guaranty (defined
below),the Confessions of Judgment (defined below), each of the Buyer Notes
(defined below),the Trust Deed (defined below), the Request(defined below),the
Escrow Agreements (defined below), the Transfer Agent Letter (defined below),the
Officer’s Certificate (as defined below), the Warrant, and all other
certificates, documents, agreements, resolutions and instruments delivered to
any party under or in connection with this Agreement.
 
 
2

--------------------------------------------------------------------------------

 
 
“Transfer Agent” means, at any time, the transfer agent for the Company’s Common
Stock.

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

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

2.           AGREEMENT TO PURCHASE; PURCHASE PRICE.

a.           Purchase.

(i)           Subject to the terms and conditions of this Agreement and the
other Transaction Documents, the undersigned Buyer hereby agrees to purchase
from the Company aSecured Convertible Promissory Note inprincipal amount of
$2,545,000.00 substantially in the form attached hereto as Annex II (“Company
Note #1”). Subject to the satisfaction of the Conditional Note Purchase
Conditions (defined below), the Buyer also agrees to purchase from the Company a
Secured Convertible Promissory Note in the principal amount of $165,000.00
substantially in the form attached hereto as Annex III (“Company Note #2,” and
together with Company Note #1, the “Notes”).  The Notes shall be secured by (A)
a Security Agreement substantially in the form attached hereto as Annex IV
listing each of the Buyer Notes as security for the Company’s obligations under
the Transaction Documents (the “Security Agreement”), (B) a Stock Pledge
Agreement (the “Pledge Agreement”) substantially in the form attached hereto as
Annex V whereby Richard Azani (“Azani”) will pledge 15,000,000 shares of the
Company’s Common Stock as additional security for the Company’s obligations
under the Transaction Documents, and (C) a Personal Guaranty substantially in
the form attached hereto as Annex VI (the “Guaranty”) executed by Azani. In
consideration thereof, the Buyer shall (1) pay the initial amount set forth on
the Buyer’s signature page to this Agreement (the “Initial Cash Purchase
Price”), (2) agree to pay the conditional amount set forth on the Buyer’s
signature page to this agreement (the “Conditional Cash Purchase Price”) upon
the satisfaction of the Conditional Note Purchase Conditions, and (3) issue to
the Company theBuyer Notes (the sum of the initial principal amounts of the
Buyer Notes, together with the Initial Cash Purchase Price and the Conditional
Cash Purchase Price, the “Purchase Price.”Buyer Note #1 shall be secured by a
Trust Deed substantially in the form attached hereto as Annex VII (the “Trust
Deed”).Buyer Notes #2 - #10 shall be secured by such collateral as the Buyer
determines in his sole discretion, provided that such collateral has a value
equal to or in excess of the principal amount of such Buyer Note. Upon such
determination, the Buyer and the Company shall enter into such additional
agreements as shall be reasonably necessary, as determined in the Buyer’s sole
discretion, to provide evidence of such security interest.The Initial Cash
Purchase Price and, if applicable, the Conditional Cash Purchase Price, shall be
paid in accordance with the Wire Instructions. The Purchase Price is allocated
to the Notes, the OID (as defined below) and the Warrant as set forth in the
table in Annex VIII attached hereto.

(ii)           The Buyer shall be obligated to pay to the Company the
Conditional Cash Purchase Price any time between the 90th day from the date of
this Agreement and the 120th day therefrom, as determined in the Buyer’s sole
discretion, provided that the following conditions are satisfied on the 90th day
from the date of this Agreement (the “Conditional Note Purchase Conditions”):

(1)           No Trigger Event (as defined in the Notes) has occurred or is
continuing;
 
 
3

--------------------------------------------------------------------------------

 

 
(2)           There has been no decline in the five (5)-day trailing average
VWAP (as defined in the Notes) for the Common Stock to less than the Floor Price
(as defined in the Notes) at any given time; or

(3)           There has been no decline in the twenty (20)-day trailing average
daily dollar volume of the Common Stock in its Principal Trading Market to less
than $40,000.00 of volume per day at any time.

In the event any of the foregoing events occur on or prior to the 90th day from
the date of this Agreement, the Buyer shall not be obligated to pay to the
Company the Conditional Cash Purchase Price and the Company shall not issue
Company Note #2.

(iii)           In consideration for the Initial Cash Purchase Price, the
Company will also issue to the Buyer a Warrant to Purchase Shares of Common
Stock in the form attached hereto as Annex IX (the “Warrant”).

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

(v)           The Requestshall be held in escrow in accordance with the terms of
the Escrow Agreement substantially in the form attached hereto as Annex XI (the
“Escrow Agreement”).

(vi)          The Company shall also execute and deliver to the Transfer Agent,
and the Transfer Agent shall execute to indicate its acceptance thereof, the
irrevocable transfer agent instruction letter substantially in the form attached
hereto as Annex XII (the “Transfer Agent Letter”).

(vii)          The Company shall also execute and deliver to the Buyer two
Consents to Entry of Judgment by Confession in the form attached hereto as Annex
XIII and Annex XIV respectively, and Azani shall execute and deliver to the
Buyer a Consent to Entry of Judgment by Confession in the form attached hereto
as Annex XV (collectively, the “Confessions of Judgment”).

(viii)        The Company shall also cause Azani, its Chief Executive Officer,
to execute and deliver to the Buyer the Notarized Certificate of Richard Azani
(the “Officer’s Certificate”) in the form attached hereto as Annex XVI.

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

(1)           The Initial Cash Purchase Price;

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

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

(4)           A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XIX (“Buyer Note #3”);

(5)           A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XX(“Buyer Note #4”);
 
 
4

--------------------------------------------------------------------------------

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

(7)           A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XXII (“Buyer Note #6”);

(8)           A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XXIII (“Buyer Note #7”);

(9)           A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XXIV (“Buyer Note #8”);

(10)         A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XXV (“Buyer Note #9”);

(11)         A Secured Buyer Notein the principal amount of $200,000.00
substantially in the form attached hereto as Annex XXVI (“Buyer Note #10,” and
together with Buyer Note #1,Buyer Note #2, Buyer Note #3, Buyer Note #4, Buyer
Note #5, Buyer Note #6, Buyer Note #7, Buyer Note #8, and Buyer Note #9,the
“Buyer Notes”); and

(12)         The Trust Deed.

(x)           Thetender of the Purchase Price and the issuance and sale of the
Notesand the Warrant to the Buyer are sometimes referred to herein and in the
other Transaction Documents as the purchase and sale of the Notes and Warrant.

b.           Form of Payment; Delivery of Notes and Warrant.The purchase and
sale of the Notes and the Warrant shall take place at a closing (the “Closing”)
to be held at the offices of the Buyer on the Closing Date.  At the Closing, the
Company will deliver to the Buyer theTransaction Documents (other than Company
Note #2) against receipt by the Company of the Initial Cash Purchase Price (as
defined below) andthe Buyer Notes. On any date within thirty (30) days of the
satisfaction of the Conditional Note Purchase Conditions, which date shall be
selected by the Buyer in his sole discretion, the Company will deliver to the
Buyer Company Note #2 against receipt by the Company of the Conditional Cash
Purchase Price.

c.           Initial Cash Purchase Price.The Notescarry an original issue
discounttotaling, on an aggregate basis, $245,000.00 (the “OID”).  In addition,
the Company agrees to pay $15,000.00 to the Buyer to cover the Buyer’s legal
fees, accounting costs, due diligence, monitoring and other transaction costs
incurred in connection with the purchase and sale of the Securities (the
“Transaction Expenses”), which amount is included in the initial principal
balance of Company Note #1.  The Initial Cash Purchase Price, therefore, shall
be $300,000.00, computed as follows: $2,710,000.00less the OID lessthe
Transaction Expenses less the sum of initial principal amounts of the Buyer
Notes less the Conditional Cash Purchase Price.

3.           BUYER REPRESENTATIONS AND WARRANTIES.

The Buyer represents and warrants to, and covenants and agrees with, the
Company, as of the date hereof and as of the Closing Date, as follows:
 
 
5

--------------------------------------------------------------------------------

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

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

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

a.           Rights of Others Affecting the Transactions.  There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Securities.  No other party has a currently exercisable right of first refusal
which would be applicable to any or all of the transactions contemplated by the
Transaction Documents.

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

c.           Authorized Shares.

(i)           The authorized capital stock of the Company consists of
100,000,000 shares of Preferred Stock, $0.001 par value per share, noshares of
which have been issued, 100,000,000shares of Common Stock, $0.001 par value per
share, of which approximately ________________are undiluted shares and
approximately 45,750,000(fully diluted) are outstanding. Of the outstanding
shares of Common Stock, approximately _____________shares are beneficially owned
by Affiliates of the Company.

(ii)           Other than as set forth in the Company’s SEC Documents, there are
no outstanding securities which are convertible into or exchangeablefor 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.
 
 
6

--------------------------------------------------------------------------------

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

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

(v)           The Conversion Shares and Warrant Shares are enforceable against
the Company and the Company presently has no claims or defenses of any nature
whatsoever with respect to the Conversion Shares or the Warrant Shares.

d.           Transaction Documents and Stock.  This Agreement and each of the
other Transaction Documents, and the transactions contemplated hereby and
thereby, have been duly and validly authorized by the Company. This Agreement
has been duly executed and delivered by the Company and this Agreement is, and
the Notes, the Security Agreement, the Pledge Agreement, the Guaranty, the
Confessions of Judgment,the Warrant, the Officer’s Certificate, the Request, the
Trust Deed, the Escrow Agreementand each of the other Transaction Documents,
when executed and delivered by the Company (if necessary), will be, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors’ rights generally.

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

f.           Approvals.  No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
 
 
7

--------------------------------------------------------------------------------

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

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

i.           Full Disclosure.  There is no fact known to the Company or that the
Company should know after having made all reasonable inquiries (other than
conditions known to the public generally or as disclosed in the Company’s SEC
Documents) that has not been disclosed in writing to the Buyer that would
reasonably be expected to have or result in a Material Adverse Effect.
 
 
8

--------------------------------------------------------------------------------

 
 

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

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

l.           Absence of Certain Company Control Person Actions or Events.Other
than as set forth in the Company’s SEC Documents, none of the following has
occurred during the past five (5) years with respect to a Company Control
Person:
 
(i) A petition under the federal bankruptcy laws or any state insolvency law was
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such Company Control
Person, or any partnership in which he or she was a general partner at or within
two years before the time of such filing, or any corporation or business
association of which he or she was an executive officer at or within two years
before the time of such filing;

(ii) Such Company Control Person was convicted in a criminal proceeding or is a
named subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses);

(iii) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him or her from, or
otherwise limiting, the following activities:

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

B. engaging in any type of business practice; or

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

(iv) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than sixty (60)
days the right of such Company Control Person to engage in any activity
described in subsection (iii) immediately above, or to be associated with
Persons engaged in any such activity; or
 
 
9

--------------------------------------------------------------------------------

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

n.           No Integrated Offering.  Neither the Company nor any of its
Affiliates nor any Person acting on its or their behalf has, directly or
indirectly, made any offer or sales of any security or solicited any offers to
buy any security under circumstances that would eliminate the availability of
the exemption from registration under Regulation D in connection with the offer
and sale of the Securities as contemplated hereby.

o.           Dilution.  Each of the Company and its executive officers and
directors is aware that the number of shares issuable upon conversion of the
Notes and exercise of the Warrant,or pursuant to the other terms of the
Transaction Documents may have a dilutive effect on the ownership interests of
the other stockholders (and Persons having the right to become stockholders) of
the Company.  The Company specifically acknowledges that its obligation to issue
(i) the Conversion Shares upon conversion of the Notes and (ii) the Warrant
Shares upon exercise of the Warrant, is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other stockholders of the Company, and the Company will honor such obligations,
including honoring every Notice of Conversion (or “Conversion Notice” as
contemplated by the Notes), unless the Company is subject to an injunction
(which injunction was not sought by the Company or any of its directors or
executive officers) prohibiting the Company from doing so.

p.           Fees to Brokers, Placement Agents and Others.  The Company has
taken no action which would give rise to any claim by any Person for a brokerage
commission, placement agent or finder’s fees or similar payments by the Buyer
relating to this Agreement or the transactions contemplated hereby.  Except for
such fees arising as a result of any agreement or arrangement entered into by
the Buyer without the knowledge of the Company (a “Buyer’s Fee”), the Buyer
shall have no obligation with respect to such fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
subsection that may be due in connection with the transactions contemplated
hereby.  The Company shall indemnify and hold harmless each of the Buyer, his
employees, representatives, attorneys, agents, and next of kin, and their
respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorneys’ fees) and expenses suffered
in respect of any such claimed or existing fees (other than a Buyer’s Fee, if
any).
 
 
10

--------------------------------------------------------------------------------

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

r.           Confirmation.  The Company agrees that, if, to the knowledge of the
Company, any events occur or circumstances exist prior to the payment of the
Purchase Price to the Company which would make any of the Company’s
representations or warranties set forth herein materially untrue or materially
inaccurate as of such date, the Company shall immediately notify the Buyer in
writing prior to such date of such fact, specifying which representation,
warranty or covenant is affected and the reasons therefor.
 
s.           Title. The Company and the Subsidiaries, if applicable, own and
have good and marketable title in fee simple absolute to, or a valid leasehold
interest in, all their respective real properties and good title to their other
respective assets and properties, subject to no liens, claims or encumbrances
except as have been disclosed to the Buyer.
 
t.            Intellectual Property.
 
(i)           Ownership.  The Company owns or possesses or can obtain on
commercially reasonable terms sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses
(software or otherwise), information, know-how, inventions, discoveries,
published and unpublished works of authorship, processes and any and all other
proprietary rights (“Intellectual Property”) necessary to the business of the
Company as presently conducted, the lack of which could reasonably be expected
to have a Material Adverse Effect.  Except for agreements with its own employees
or consultants, standard end-user license agreements, support/maintenance
agreements and agreements entered in the ordinary course of the Company’s
business, all of which have been made available for review by the Buyer, there
are no outstanding options, licenses or agreements relating to the Intellectual
Property of the Company, and the Company is not bound by or a party to any
options, licenses or agreements with respect to the Intellectual Property of any
other person or entity.  The Company has not received any written communication
alleging that the Company has violated or, by conducting its business as
currently conducted, would violate any of the Intellectual Property of any other
person or entity, nor is the Company aware of any basis therefor.  The Company
is not obligated to make any payments by way of royalties, fees or otherwise to
any owner or licensor of or claimant to any Intellectual Property with respect
to the use thereof in connection with the present conduct of its business other
than in the ordinary course of its business.  There are no agreements,
understandings, instruments, contracts, judgments, orders or decrees to which
the Company is a party or by which it is bound which involve indemnification by
the Company with respect to infringements of Intellectual Property, other than
in the ordinary course of its business.
 
 
11

--------------------------------------------------------------------------------

 
 
(ii)           No Breach by Employees.  The Company is not aware that any of its
employees is obligated under any contract or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
materially interfere with the use of his or her efforts to promote the interests
of the Company or that would conflict with the Company’s business as presently
conducted.  Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company’s business by the employees of the Company, nor the
conduct of the Company’s business as presently conducted, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated.  The Company does not
believe it is or will be necessary to use any inventions of any of its employees
made prior to their employment by the Company of which it is aware.

5.           CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

a.           Covenants and Acknowledgements of the Buyer.

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

(ii)           Restrictive Legend.  The Buyer acknowledges and agrees that,
until such time as the relevant Shares have been registered under the 1933 Act,
and may be sold in accordance with an effective registration statement, or until
such Shares can otherwise be sold without restriction, whichever is earlier, the
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

(iii)           Confessions of Judgment.  The Buyer shall not file the
Confessions of Judgment unless and until an Event of Default (as defined in the
Notes) shall have occurred.

b.           Covenants, Acknowledgements and Agreements of the Company.As a
condition to the Buyer’s obligation to purchase the Securities contemplated by
this Agreement, and as a material inducement for the Buyer to enter into this
Agreement and the other Transaction Documents, until all of the Company’s
obligations hereunder and the Notesare paid and performed in full and the
Warrant is exercised in full, or within the timeframes otherwise specifically
set forth below, the Company shall comply with the following covenants:
 
 
12

--------------------------------------------------------------------------------

 
 

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

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

(iii)          Listing.  The Company’s Common Stock shall be listed or quoted
for trading on any of (a) NYSE Amex, (b) the New York Stock Exchange, (c) the
Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC
Bulletin Board. The Company shall promptly secure the listing of all of the
Conversion Shares and Warrant Shares upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is then listed
(subject to official notice of issuance) and shall maintain such listing of all
securities from time to time issuable under the terms of the Transaction
Documents. The Company will comply in all material respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Principal Trading Market and/or the Financial Industry Regulatory Authority,
Inc. (“FINRA”) or any successor thereto, as the case may be, applicable to it at
least through the date which is sixty (60) days after the later of (x) the date
on which the Noteshave been converted or have been paid in full, or (y) the date
on which the Warrant has been exercised in full.

(iv)          Use of Proceeds.  The Company will use the net proceeds received
hereunder for working capital and general corporate purposes only; provided,
however, the Company will not use such proceeds to pay fees payable (a) to any
broker or finder relating to the offer and sale of the Notes and the Warrant, or
(b) to any other party relating to any financing transaction effected prior to
the Closing Date.

 
13

--------------------------------------------------------------------------------

 
 

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

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

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

(viii)        Corporate Existence.  The Company shall (a) do all things
necessary to preserve and keep in full force and effect its corporate existence,
including, without limitation, preserving and keeping in full force and effect
all licenses or similar qualifications required by it to engage in its business
in all jurisdictions in which it is at the time so engaged; (b) continue to
engage in business of the same general type as conducted as of the date hereof;
and (c) continue to conduct its business substantially as now conducted or as
otherwise permitted hereunder.

(ix)           Taxes.  The Company shall pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
delinquent or in default, which, if unpaid, might reasonably be expected to give
rise to liens or charges upon such properties or any part thereof, unless, in
each case, the validity or amount thereof is being contested in good faith by
appropriate proceedings and the Company has maintained adequate reserves with
respect thereto in accordance with GAAP.

(x)            Compliance. The Company shall comply in all material respects
with all federal, state and local laws and regulations, orders, judgments,
decrees, injunctions, rules, regulations, permits, licenses, authorizations and
requirements (collectively, “Requirements”) of all governmental bodies,
insurers, departments, commissions, boards, courts, authorities, officials or
officers which are applicable to the Company, its business, operations, or any
of its properties, except where the failure to so comply would not have a
Material Adverse Effect on the Company or any of its properties; provided,
however, that nothing provided herein shall prevent the Company from contesting
in good faith the validity or the application of any Requirements.
 
 
14

--------------------------------------------------------------------------------

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

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

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

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

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

 
The Company shall pay any payments incurred under this subsection in immediately
available funds upon demand by the Holder; provided, however, that the Holder
making the demand may specify that the payment shall be made in shares of Common
Stock at the Conversion Price (as defined in the Notes) applicable to the date
of such demand.  If the payment is to be made in shares of Common Stock, such
shares shall be considered Conversion Shares under the Notes, with the “Delivery
Date” for such shares being determined from the date of such demand. The demand
for payment of such amount in shares shall be considered a “Conversion Notice”
(but the delivery of such shares shall be in payment of the amount contemplated
by this subsection and not in payment of any principal or interest on theNotes).
 
 
15

--------------------------------------------------------------------------------

 
 
(xv)         Authorized Shares.  The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the full
conversion of the Notes and exercise of the Warrant multiplied by 2(the “Share
Reserve”). If at any time the Share Reserve is insufficient to effect the full
conversion of the Notes and exercise of the Warrant, the Company shall
immediately increase the Share Reserve accordingly. If the Company does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Company shall call and hold a special meeting of the
stockholders within thirty (30) days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company’s management shall
recommend to the Company’s stockholders to vote in favor of increasing the
number of authorized shares of Common Stock.  Management shall also vote all of
its shares in favor of increasing the number of authorized shares of Common
Stock. The Company shall uses its best efforts to cause such additional shares
of Common Stock to be authorized so as to comply with the requirements of this
Section.

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

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

C.            Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate of the Company, or amend or modify any agreement related to
any of the foregoing, except on terms that are no less favorable, in any
material respect, than those obtainable from any person or entity who is not an
Affiliate of the Company;

D.            Transfer, assign, sell, pledge, hypothecate or otherwise alienate
or encumber the Buyer Notes in any way without the prior written consent of the
Buyer; or

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

(xviii)      Security for Buyer Notes #2 - #10. Upon reasonable notice from the
Buyer that the Buyer has determined the collateral he will provide to secure
Buyer Notes #2 - #10, the Company shall enter into all such documents as the
Buyer shall reasonably determine are necessary to provide for the security of
such Buyer Notes, including an escrow agreement, line of credit agreement, and
any other such documents, all in forms reasonably acceptable to the Buyer.
 
 
16

--------------------------------------------------------------------------------

 
 
6.           TRANSFER AGENT INSTRUCTIONS.

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

b.           (i)           The Company understands that a delay in the delivery
of Conversion Shares or Warrant Shares, whether on conversion of any of the
Notes and/or in payment of accrued interest, or exercise of the Warrant, beyond
the relevant Delivery Date (as defined in the Notes or the Warrant, as
applicable) could result in economic loss to the Holder.  As compensation to the
Holder for such loss, in addition to any other available remedies at law or
equity, the Company agrees to pay late payments to the Holder for late delivery
of the Shares in accordance with the following schedule (where “No. Business
Days Late” is defined as the number of Trading Days beyond three (3) Trading
Days after the Delivery Date):
 
 
17

--------------------------------------------------------------------------------

 
 

   
Late Payment for Each $10,000,00
     
of Principal or Interest Being Converted
 
No. Business Days Late
 
(or amount of Warrant exercise)
         
1
  $ 100.00  
2
  $ 200.00  
3
  $ 300.00  
4
  $ 400.00  
5
  $ 500.00  
6
  $ 600.00  
7
  $ 700.00  
8
  $ 800.00  
9
  $ 900.00  
10
  $ 1,000.00  
>10
 
$1,000.00 + $200.00 for each
Business Day Late beyond 10
days
 

As elected by the Holder, the amount of any payments incurred under this Section
6(b)(i) shall either be automatically added to the principal balance of the
applicable Noteor otherwise paid by the Company in immediately available funds
upon demand. Nothing herein shall limit the Holder’s right to pursue additional
damages for the Company’s failure to issue and deliver the Shares to the Holder
within a reasonable time.  Furthermore, in addition to any other remedies which
may be available to a Holder, in the event that the Company fails for any reason
to effect delivery of such Shares within three (3) Trading Days after the
Delivery Date, the Holder will be entitled to revoke the relevant Notice of
Conversion or Notice of Exercise by delivering a notice to such effect to the
Company prior to such Holder’s receipt of the relevant Shares, whereupon the
Company and the Holder shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion or Notice of
Exercise, as the case may be; provided, however, that any payments contemplated
by this Section 6(b)(i) which have accrued through the date of such revocation
notice shall remain due and owing to the Holder notwithstanding such revocation.

(ii)           If, by the fifth Trading Day after the  relevant Delivery Date,
the Company fails for any reason to deliver the Shares, but at any time after
the Delivery Date, the Holder purchases, in an arm’s-length open market
transaction or otherwise, shares of Common Stock (the “Covering Shares”) in
order to make delivery in satisfaction of a sale of Common Stock by the Holder
(the “Sold Shares”), which delivery such Holder anticipated to make using the
shares to be issued upon such conversion or exercise (a “Buy-In”), the Holder
shall have the right to require the Company to pay to the Holder, in addition to
and not in lieu of  the amounts contemplated in other provisions of the
Transaction Documents, including, but not limited to, the provisions of the
immediately preceding Section 6(b)(i)), the Buy-In Adjustment Amount (as defined
below).  The “Buy-In Adjustment Amount” is the amount equal to the number of
Sold Shares multiplied by the excess, if any, of (x) the Holder’s total purchase
price per share (including brokerage commissions, if any) for the Covering
Shares over (y) the net proceeds per share (after brokerage commissions, if any)
received by the Holder from the sale of the Sold Shares.  The Company shall pay
the Buy-In Adjustment Amount to the Holder in immediately available funds
immediately upon demand by the Holder.  By way of illustration and not in
limitation of the foregoing, if the Holder purchases shares of Common Stock
having a total purchase price (including brokerage commissions) of $11,000.00 to
cover a Buy-In with respect to shares of Common Stock the Holder sold for net
proceeds of $10,000.00, the Buy-In Adjustment Amount which Company will be
required to pay to the Holder will be $1,000.00.
 
 
18

--------------------------------------------------------------------------------

 
 
c.            The Company shall assume any fees or charges of the Transfer Agent
or Company Counsel regarding (i) the removal of a legend or stop transfer
instructions with respect to the Securities, and (ii) the issuance of
certificates or DWAC registration to or in the name of the Holder or the
Holder’s designee or to a transferee as contemplated by an effective
registration statement.  Notwithstanding the foregoing, it shall be the Holder’s
responsibility to obtain all needed formal requirements (specifically: medallion
guarantee and prospectus delivery compliance) in connection with any electronic
issuance of shares of Common Stock.

d.           The Holder of any Note  shall be entitled to exercise its
conversion privilege with respect to such Note, as the case may be,
notwithstanding the commencement of any case under 11 U.S.C. §101 etseq. (the
“Bankruptcy Code”).  In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives, to the fullest extent permitted, any rights to
relief it may have under 11 U.S.C. §362 in respect of such Holder’s exercise
privilege.  The Company hereby waives, to the fullest extent permitted, any
rights to relief it may have under 11 U.S.C. §362 in respect of the conversion
of such Note.

7.           CLOSING DATE.

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

b.           Closing of the purchase and sale of Company Note #1 and the
Warrant, which the parties anticipate shall occur concurrently with the
execution of this Agreement, shall occur at the offices of the Buyer and shall
take place no later than 3:00 P.M., Eastern Time, or on such day or such other
time as is mutually agreed upon by the Company and the Buyer.  Closing of the
purchase and sale of Company Note #2, which shall occur, if at all, on the date
selected by the  Buyer after satisfaction of the Conditional Note Purchase
Conditions and before the date that is 120 days from the date of this Note,
shall occur at the offices of the Buyer and shall take place no later than 3:00
P.M., Eastern Time, or on such day or such other time as is mutually agreed upon
by the Company and the Buyer.

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

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

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

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

d.           The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date; and
 
 
19

--------------------------------------------------------------------------------

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

9.           CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.The Buyer’s
obligation to purchase the Notes and the Warrant is conditioned upon and subject
to the fulfillment, on or prior to the Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by the Buyer
(notwithstanding the following conditions, the Buyer’s obligation to purchase
Company Note #2 shall also be conditioned on the fulfillment of the Conditional
Note Purchase Conditions set forth above):

a.           The execution and delivery of this Agreement, the Security
Agreement, the Pledge Agreement (and corresponding delivery to the Buyer of the
Pledged Shares as set forth in the Pledge Agreement),the Guaranty, the
Confessions of Judgment, the Officer’s Certificate, the Escrow Agreement, the
Transfer Agent Letterand, as applicable, the other Transaction Documents by the
Company and Azani, as applicable, on or before the Closing Date;

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

c.           The delivery by the Company of the Request, in original form, duly
executed by the Company, in accordance with this Agreement;

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

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

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

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

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

i.           Except for any notices required or permitted to be filed after the
Closing Date with certain federal and state securities commissions, the Company
shall have obtained (i) all governmental approvals required in connection with
the lawful sale and issuance of the Securities, and (ii) all third party
approvals required to be obtained by the Company in connection with the
execution and delivery of the Transaction Documents by the Company or the
performance of the Company’s obligations thereunder; and
 
 
20

--------------------------------------------------------------------------------

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

10.         INDEMNIFICATION.

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

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

11.         SPECIFIC PERFORMANCE.  The Company and the Buyer acknowledge and
agree that irreparable damage would occur in the event that any provision of
this Agreement or any of the other Transaction Documents were not performed in
accordance with its specific terms or were otherwise breached.  It is
accordingly agreed that the parties (including any Holder) shall be entitled to
an injunction or injunctions, without (except as specified below) the necessity
to post a bond, to prevent or cure breaches of the provisions of this Agreement
or such other Transaction Document and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity; provided, howeverthat the
Company, upon receipt of a Notice of Conversion or a Notice of Exercise, may not
fail or refuse to deliver the stock certificates and the related legal opinions,
if any, or if there is a claim for a breach by the Company of any other
provision of this Agreement or any of the other Transaction Documents, the
Company shall not raise as a legal defense, any claim that the Holder or anyone
associated or affiliated with the Holder has violated any provision hereof or
any other Transaction Document or has engaged in any violation of law or any
other claim or defense, unless the Company has first posted a bond for one
hundred fifty percent (150%) of the principal amount and, if relevant, then
obtained a court order specifically directing it not to deliver said stock
certificates to the Holder. The proceeds of such bond shall be payable to the
Holder to the extent that the Holder obtains judgment or its defense is
recognized.  Such bond shall remain in effect until the completion of the
relevant proceeding and, if the Holder appeals therefrom, until all such appeals
are exhausted.  This provision is deemed incorporated by reference into each of
the Transaction Documents as if set forth therein in full.
 
 
21

--------------------------------------------------------------------------------

 
 
12.         OWNERSHIP LIMITATION.If at any time after the Closing, the Buyer
shall or would receive shares of the Company’s Common Stock in payment of
interest or principal under the Notes or upon conversion of the Notes or
exercise of the Warrant, so that the Buyer would, together with other shares of
Common Stock held by him or his Affiliates, hold by virtue of such action or
receipt of additional shares of Common Stock a number of shares exceeding 9.99%
of the number of shares of the Company’s Common Stock outstanding on such date
(the “9.99% Cap”), the Company shall not be obligated and shall not issue to the
Buyer shares of its Common Stock which would exceed the 9.99% Cap, but only
until such time as the 9.99% Cap would no longer be exceeded by any such receipt
of shares of Common Stock by the Buyer. The foregoing limitations are
enforceable, unconditional and non-waivable.

13.         MISCELLANEOUS.The Company and the Buyer hereby agree that the
provisions of this Section 13 shall apply to all of the Transaction Documents.

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

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

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

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

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

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

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

h.           Amendment.  This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.
 
 
22

--------------------------------------------------------------------------------

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

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

k.           Buyer’s Expenses.  In the event the Company or the Buyer elects not
to effectthe Closing for any reason, the Company shall pay $15,000 in cash to
the Buyer for the Buyer’s legal, administrative and due diligence
expenses.  Except as provided in the immediately preceding sentence, and except
for $15,000 which has been added to and included in the principal amount of
Company Note #1for the Buyer’s legal, administrative and due diligence expenses,
the Company and the Buyer shall be responsible for paying such party’s own fees
and expenses (including legal expenses) incurred in connection with the
preparation and negotiation of this Agreement and the other Transaction
Documents and the closing of the transactions contemplated hereby and thereby.

l.           Assignment by the Company.  Notwithstanding anything to the
contrary herein, the rights, interests or obligations of the Company hereunder
may not be assigned, by operation of law or otherwise, in whole or in part, by
the Company without the prior written consent of the Buyer, which consent may be
withheld at the sole discretion of the Buyer; provided, however, that in the
case of a merger, sale of substantially all of the Company’s assets or other
corporate reorganization, the Buyer shall not unreasonably withhold, condition
or delay such consent.

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

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

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

p.           Replacement of the Notes. Subject to any restrictions on or
conditions to transfer set forth in the Notes, the Holder of theNotes, at its
option, may in person or by duly authorized attorney surrender the same for
exchange at the Company’s chief executive office, and promptly thereafter and at
the Company’s expense, except as provided below, receive in exchange therefor
one or more new convertible secured promissory note(s), each in the principal
requested by such Holder, dated the date to which interest shall have been paid
on the Notes so surrendered or, if no interest shall have yet been so paid,
dated the date of the Notes so surrendered and registered in the name of such
person or persons as shall have been designated in writing by such Holder or its
attorney for the same principal amount as the then unpaid principal amount of
the Notesso surrendered. As applicable, upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of theNotes and (i) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it; or (ii) in the case of
mutilation, upon surrender thereof, the Company, at its expense, will execute
and deliver in lieu thereof a new convertible secured promissory note executed
in the same manner as the Notesbeing replaced, in the same principal amount as
the unpaid principal amount of such Notes and dated the date to which interest
shall have been paid on theNotes or, if no interest shall have yet been so paid,
dated the date of the Note.
 
 
23

--------------------------------------------------------------------------------

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

(i) the date delivered, if delivered by personal delivery as against written
receipt therefor or by confirmed facsimile or electronic mail transmission,

(ii) the fifth Trading Day after deposit, postage prepaid, in the United States
Postal Service by registered or certified mail, or

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

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

If to the Company:

A5 Laboratories Inc.
Attn: Richard Azani
10300 Chemin Core de liesse
Lachina, Quebec, H8T 1A3

If to the Buyer:

John M. Fife
303 East Wacker Drive, Suite 1200
Chicago, Illinois  60601

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

Carman, Lehnof, Israelsen, LLP
Attn: Jonathan K. Hansen
4626 North 300 West, Suite 160
Provo, Utah 84604
Telephone:  (801) 209-5558
Facsimile:   (866) 793-7309

14.         SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. The Company’s
and the Buyer’s covenants, agreements, representations and warranties contained
herein shall survive the execution and delivery of this Agreement and the other
Transaction Documents and the Closing hereunder, and shall inure to the benefit
of the Buyer and the Company and their respective successors and permitted
assigns.
 
 
24

--------------------------------------------------------------------------------

 
 
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

 
25

--------------------------------------------------------------------------------

 
 

IN WITNESS WHEREOF, each of the undersigned represents that the foregoing
statements made by it above are true and correct and that it has caused this
Agreement to be duly executed on its behalf (if an entity, by one of its
officers thereunto duly authorized) as of the date first above written.
 
TOTAL PURCHASE PRICE:
 
$2,450,000.00
     
INITIAL CASHPURCHASE PRICE:
 
$300,000.00
     
CONDITIONALCASH PURCHASE PRICE:
 
$150,000.00
         
THE BUYER:
         
/s/ John M. Fife
   
John M. Fife, individually
         
THE COMPANY:
         
A5 LABORATORIES INC.
         
By:
/s/ Richard Azani
   
Name:
Richard Azani
   
Title:
Chief Executive Officer
     
ACKNOWLEDGED AND AGREED:
         
/s/ Richard Azani
   
Richard Azani
   

 
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
 
 
 

--------------------------------------------------------------------------------

 
 
ANNEX I
WIRE INSTRUCTIONS
ANNEX II
COMPANY NOTE#1
ANNEX III
COMPANYNOTE #2
ANNEX IV
SECURITY AGREEMENT
ANNEX V
PLEDGE AGREEMENT
ANNEX VI
PLEDGE AGREEMENT
ANNEX VII
TRUST DEED
ANNEX VIII
ALLOCATION OF PURCHASE PRICE
ANNEX IX
REQUEST
ANNEX X
WARRANT
ANNEX XI
ESCROW AGREEMENT
ANNEX XII
TRANSFER AGENT LETTER
ANNEX XIII
COMPANY CONFESSION OF JUDGMENT #1
ANNEX XIV
COMPANY CONFESSION OF JUDGMENT #2
ANNEX XV
AZANI CONFESSION OF JUDGMENT
ANNEX XVI
OFFICER’S CERTIFICATE
ANNEX XVII
BUYER NOTE #1
ANNEX XVIII
BUYER NOTE #2
ANNEX XIX
BUYER NOTE #3
ANNEX XX
BUYER NOTE #4
ANNEX XXI
BUYER NOTE #5
ANNEX XXII
BUYER NOTE #6
ANNEX XXIII
BUYER NOTE #7
ANNEX XXIV
BUYER NOTE #8
ANNEX XXV
BUYER NOTE #9
ANNEX XXVI
BUYER NOTE #10

 
 
 

--------------------------------------------------------------------------------