Exhibit 10.2
 
Securities Purchase Agreement
 
This Securities Purchase Agreement, dated as of October 1, 2013 (this
“Agreement”), is entered into by and between North Bay Resources, Inc., a
Delaware corporation (the “Company”), and Typenex Co-Investment, LLC, an
Illinois limited liability company, its successors and/or assigns (“Buyer”).
 
RECITALS:
 
A.           The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration for offers
and sales to accredited investors afforded, inter alia, under Regulation D
(“Regulation D”) as promulgated by the United States Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933
Act”), and/or Section 4(2) of the 1933 Act.
 
B.           The Buyer wishes to acquire from the Company, and the Company
desires to issue and sell to the Buyer, 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
the Note, this Agreement and the other Transaction Documents (as defined below).
 
AGREEMENT:
 
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 Hansen Black Anderson Ashcraft PLLC.
 
“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
Securities.
 
“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 Sichenzia Ross Friedman Ference LLP.
 
“Company’s SEC Documents” means the Company’s filings on the SEC’s EDGAR system.
 
 
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“Conversion Date” means the date a Holder submits a Conversion Notice, as
provided in the Note.
 
“Conversion Notice” has the meaning ascribed to it in the Note.
 
“Conversion Price” has the meaning ascribed to it in the Note.
 
“Conversion Shares” has the meaning ascribed to it in the Note.
 
“Delivery Date” means the date that Conversion Shares are required to be
delivered to Holder under Section 3 or Section 8 of the Note, as applicable.
 
“DTC” means the Depository Trust Company.
 
“DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer Program.
 
“DWAC” means Deposit Withdrawal at Custodian as defined by the DTC.
 
“DWAC Eligible Conditions” means that (i) the Common Stock is eligible at DTC
for full services pursuant to DTC’s Operational Arrangements, including without
limitation transfer through DTC’s DWAC system, (ii) the Company has been
approved (without revocation) by the DTC’s underwriting department, and (iii)
the Transfer Agent is approved as an agent in the DTC/FAST Program, (iv) the
Conversion Shares are otherwise eligible for delivery via DWAC; and (v) the
Transfer Agent does not have a policy prohibiting or limiting delivery of the
Conversion Shares via DWAC.
 
“Holder” means the Person holding the relevant Securities at the relevant time.
 
“Initial Cash Purchase Price” is defined in Section 2.1(a) hereof.
 
“Last Audited Date” means December 31, 2012.
 
“Market Price” has the meaning ascribed to it in the Note.
 
“Material Adverse Effect” means an event or combination of events, which
individually or in the aggregate, would reasonably be expected to (a) adversely
affect the legality, validity or enforceability of the Note or any of the other
Transaction Documents, (b)  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 (c) 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.
 
“Outstanding Balance” has the meaning ascribed to it in the Note.
 
“Permitted Liens” means (a) any Lien (as defined herein) for taxes not yet due
or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (b) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent, (c) any Lien
created by operation of law, such as materialmen’s liens, mechanics’ liens and
other similar liens, arising in the ordinary course of business with respect to
a liability that is not yet due or delinquent or that are being contested in
good faith by appropriate proceedings, and (d) any Lien arising under the
Transaction Documents in favor of Buyer.
 
 
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“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) the NYSE Amex, (b) the New York Stock
Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, (e) the
OTC Bulletin Board, (f) the OTCQX or OTCQB, or (g) such other market on which
the Common Stock is principally traded at the relevant time, but shall not
include OTC Pink (a.k.a., “pink sheets”).
 
“Purchase Price” is defined in Section 2.1(a) hereof.
 
“Registration Statement” means a registration statement of the Company under the
1933 Act covering securities of the Company (including Common Stock) on Form
S-3, if the Company is then eligible to file using such form, and if not
eligible, on Form S-1 or other appropriate form.
 
“Rule 144” means (a) Rule 144 promulgated under the 1933 Act or (b) 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 and the Shares.
 
“Shares” means the shares of Common Stock representing any or all of the
Conversion Shares.
 
“State of Incorporation” means Delaware.
 
“Subsidiary” or “Subsidiaries” means, as of the relevant date, any subsidiary or
subsidiaries 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 Note, the Company Security
Agreement (defined below), the Transfer Agent Letter (defined below), the Pledge
Agreement (defined below), and all other certificates (including without
limitation the Secretary’s Certificate (defined below), documents, agreements,
resolutions and instruments delivered to any party under or in connection with
this Agreement, as the same may be amended from time to time.
 
“Transfer Agent” means, at any time, the transfer agent for the Common Stock.
 
“Wire Instructions” means the wire instructions for the Initial Cash Purchase
Price, as provided by the Company, set forth on ANNEX I.
 
 
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2. AGREEMENT TO PURCHASE; PURCHASE PRICE.
 
2.1. Purchase.
 
(a) Subject to the terms and conditions of this Agreement and the other
Transaction Documents, the undersigned Buyer hereby agrees to purchase from the
Company a Secured Convertible Promissory Note in the principal amount of
$280,000.00 substantially in the form attached hereto as ANNEX II (the “Note”).
The Note shall be secured by a Security Agreement substantially in the form
attached hereto as ANNEX III (the “Company Security Agreement”) listing the
Secured Buyer Note (defined below) as security for the Company’s obligations
under the Transaction Documents. In consideration thereof, the Buyer shall pay
(i) the amount designated as the initial cash purchase price on the Buyer’s
signature page to this Agreement (the “Initial Cash Purchase Price”), and (ii)
issue to the Company the Secured Buyer Note (the principal amount of the Secured
Buyer Note, together with the Initial Cash Purchase Price, the “Purchase
Price”). Subject to Section 2.1(d), the Secured Buyer Note shall be secured by
the Membership Interest Pledge Agreement substantially in the form attached
hereto as ANNEX VIII, as the same may be amended from time to time (the “Pledge
Agreement”). The Initial Cash Purchase Price shall be paid to the Company in
accordance with the Wire Instructions. The Purchase Price is allocated to the
Tranches (as defined in the Note) of the Note as set forth in the table attached
hereto as ANNEX IX.
 
(b) In consideration for the Purchase Price, the Company shall, at the Closing
(defined below):
 
(i) execute and deliver to the Buyer the Company Security Agreement;
 
(ii) execute and deliver to the Transfer Agent, and the Transfer Agent shall
execute to indicate its acceptance thereof, the irrevocable letter of
instructions to transfer agent substantially in the form attached hereto as
ANNEX IV (the “Transfer Agent Letter”);
 
(iii) cause to be executed and delivered to the Buyer a fully executed
secretary’s certificate and written consent of directors evidencing the
Company’s approval of the Transaction Documents substantially in the forms
attached hereto as ANNEX V (together, the “Secretary’s Certificate”);
 
(iv) cause to be executed and delivered to the Buyer a fully executed share
issuance resolution to be delivered to the Transfer Agent substantially in the
form attached hereto as ANNEX VI (the “Share Issuance Resolution”); and
 
(v) execute and deliver to the Buyer the Pledge Agreement.
 
(c) At the Closing, the Buyer shall deliver the Purchase Price to the Company by
delivering the following: (i) the Initial Cash Purchase Price; and (ii) the
Secured Buyer Note in the principal amount of $125,000 duly executed and
substantially in the form attached hereto as ANNEX X (the “Secured Buyer Note”).
 
 
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(d) At the Closing, the Buyer shall execute the Pledge Agreement, thereby
granting to the Company a security interest in the collateral described therein
(the “Collateral”). The Buyer also agrees to file a UCC Financing Statement
(Form UCC1) with the Illinois Secretary of State in the manner set forth in the
Pledge Agreement in order to perfect the Company’s security interest in the
Collateral. Notwithstanding anything to the contrary herein or in any other
Transaction Document, the Buyer may, in the Buyer’s sole discretion, add
additional collateral to the Collateral covered by the Pledge Agreement, and may
substitute Collateral as the Buyer deems fit, provided that the net fair market
value of the substituted Collateral may not be less than the principal balance
of the Secured Buyer Note as of the date of any such substitution. In the event
of a substitution of Collateral, the Buyer shall timely execute any and all
amendments and documents necessary or advisable in order to properly release the
original collateral and grant a security interest upon the substitute collateral
in favor of the Company, including without limitation the filing of an
applicable UCC Financing Statement Amendment (Form UCC3) with the Illinois
Secretary of State. The Company agrees to sign the documents and take such other
measures requested by the Buyer in order to accomplish the intent of this
section, including without limitation, execution of a Form UCC3 (or equivalent)
termination statement against the Collateral within five (5) Trading Days after
written request from the Buyer. The Company acknowledges and agrees that the
Collateral may be encumbered by other monetary liens in priority and/or
subordinate positions. The intent of the parties is that the net fair market
value of the Collateral (less any other prior liens or encumbrances) will be
equal to or greater than the aggregate outstanding balance of the Secured Buyer
Note.
 
2.2. Form of Payment; Delivery of Securities.  The purchase and sale of the
Securities 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 the Transaction Documents to the Buyer against delivery by the Buyer to
the Company of the Initial Cash Purchase Price and the Secured Buyer Note, as
set forth in Section 2.1(c) above.
 
2.3. Purchase Price. The Note carries an original issue discount of $25,000.00
(the “OID”).  In addition, the Company agrees to pay $5,000.00 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 Expense Amount”), $2,500.00 of which has been
previously paid to the Buyer. The Company and the Buyer agree that the Buyer
will return the $2,500.00 to the Company at Closing and that the full
Transaction Expense Amount will be included in the initial principal balance of
the Note. The Purchase Price, therefore, shall be $250,000.00, computed as
follows: $280,000.00 original principal balance, less the OID, less the
Transaction Expense Amount.  The Initial Cash Purchase Price shall be the
Purchase Price less the initial principal amount of the Secured Buyer Note.
 
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:
 
3.1. Binding Obligation. The Transaction Documents to which the Buyer is a
party, and the transactions contemplated hereby and thereby, have been duly and
validly authorized by the Buyer.  This Agreement has been executed and delivered
by the Buyer, and this Agreement is, and each of the other Transaction Documents
to which the Buyer is a party, when executed and delivered by the Buyer (if
necessary), will be valid and binding obligations of the Buyer enforceable in
accordance with their respective terms, subject as to enforceability only to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors’ rights generally.
 
3.2. Accredited Investor Status. The Buyer is an “accredited investor” as that
term is defined in Regulation D.
 
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:
 
4.1. Rights of Others Affecting the Transactions.  There are no preemptive
rights of any stockholder of the Company, as such, to acquire the Securities. No
other party has a currently exercisable right of first refusal which would be
applicable to any or all of the transactions contemplated by the Transaction
Documents.
 
 
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4.2. 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 not taken and will not take any
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.
 
4.3. Authorized Shares.
 
(a) The authorized capital stock of the Company consists of 100 shares of
Preferred Stock Series I, $0.001 par value per share, of which 100 are
outstanding, and 250,000,000 shares of Common Stock, $0.001 par value per share,
of which approximately 115,945,676 are outstanding. Of the outstanding shares of
Common Stock, approximately 16,206,474 shares are beneficially owned by
Affiliates of the Company. Of the authorized shares of Common Stock that are not
currently outstanding, approximately 52,000,000 of such shares are reserved.
 
(b) Other than as set forth in the Company’s SEC Documents, there are no
outstanding securities which are convertible into or exchangeable for shares of
Common Stock, whether such conversion is currently exercisable or exercisable
only upon some future date or the occurrence of some event in the future.
 
(c) 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 the Note issued and
fully converted on that date.
 
(d) The Shares have been duly authorized by all necessary corporate action on
the part of the Company as of or prior to the Closing in accordance with the
terms of this Agreement, and, when issued on conversion of, or in payment of
interest on the Note in accordance with the terms thereof, 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.
 
 
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(e) The Conversion 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.
 
4.4. 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 Note,
the Company Security Agreement, and each of the other Transaction Documents,
when executed and delivered by the Company, will be, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, subject as to enforceability only to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors’ rights generally.
 
4.5. 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 Note, the
Company Security Agreement, and the other Transaction Documents do not and will
not conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under (a) the Certificate of
Incorporation or bylaws of the Company, each as currently in effect, (b) 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 (c) to the Company’s 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 the Company’s
properties or assets, except such conflict, breach or default which would not
have or result in a Material Adverse Effect.
 
4.6. Approvals.  No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders or any lender 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.
 
4.7. 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 (a) as may be otherwise indicated in such
financial statements or the notes thereto, or (b) 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.
 
 
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4.8. Absence of Certain Changes.  Since the Last Audited Date, there has been no
Material Adverse Effect. Since the Last Audited Date, the Company has not (a)
incurred or become subject to any material liabilities (absolute or contingent)
except liabilities incurred in the ordinary course of business consistent with
past practices; (b) 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; (c) 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; (d) 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; (e) 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; (f) made any increases in
employee compensation, except in the ordinary course of business consistent with
past practices; or (g) experienced any material problems with labor or
management in connection with the terms and conditions of their employment.
 
4.9. 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
since the Last Audited Date) that has not been disclosed in writing to the Buyer
that would reasonably be expected to have or result in a Material Adverse
Effect.
 
4.10. 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 the
Company or any of its properties is bound, that involve the transactions
contemplated herein or that, alone or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
 
4.11. Absence of Events of Default.  Neither the Company nor any of its
Subsidiaries is in violation of or in default with respect to (a) 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 (b) 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.
 
4.12. Absence of Certain Company Control Person Actions or Events.  None of the
following has occurred during the past five (5) years with respect to a Company
Control Person:
 
 
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(a) 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 (2) 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 (2)
years before the time of such filing;
 
(b) 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);
 
(c) 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:
 
(i) 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;
 
(ii) engaging in any type of business practice; or
 
(iii) 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;
 
(d) 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)
calendar days the right of such Company Control Person to engage in any activity
described in Section 4.12(c) above, or to be associated with Persons engaged in
any such activity; or
 
(e) 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.
 
4.13. No Undisclosed Liabilities or Events. The Company has no liabilities or
obligations other than those disclosed in the Transaction Documents or the
Company’s most recently filed SEC Documents (Form 10-K or 10-Q) 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
laws, rules or regulations, 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 (a) 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 (b)
materially or substantially change the business, assets or capital of the
Company, including its interests in Subsidiaries.
 
 
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4.14. 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 sale of any security of the Company or solicited any offer to buy any
such 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.
 
4.15. Dilution.  Each of the Company and its executive officers and directors is
aware that the number of shares of Common Stock issuable upon the execution of
this Agreement, the conversion of the Note, 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 the Conversion Shares upon a conversion of the Note 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 obligation, including honoring every Conversion Notice, 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.
 
4.16. Fees to Brokers, Placement Agents and Others. With respect to any
brokerage commissions, placement agent or finder’s fees or similar payments that
will or would become due and owing by the Company to any Person as a result of
this Agreement or the transactions contemplated hereby (“Broker Fees”), any such
Broker Fees will be made in full compliance with all applicable laws and
regulations and only to a Person that is a registered investment adviser or
registered broker-dealer. The Buyer shall have no obligation with respect to any
such Broker 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, the Buyer’s employees, officers,
directors, stockholders, managers, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorneys’ fees) and expenses suffered in respect of
any such claimed or existing fees.
 
4.17. Disclosure.  All information relating to or concerning the Company or its
Subsidiaries set forth in the Transaction Documents or in the Company’s SEC
Documents or other public filings 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 Subsidiaries or any of their business, properties, prospects,
operations or financial conditions, which under applicable laws, rules or
regulations, requires public disclosure or announcement by the Company or any
such Subsidiary.
 
4.18. 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 by the Buyer 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 events or circumstances, specifying which
representations or warranties are affected and the reasons therefor.
 
4.19. 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.
 
 
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4.20. Intellectual Property.
 
(a) 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.
 
(b) 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.
 
4.21. No Shell Company. The Company is not, nor has it ever been, the type of
“issuer” defined in Rule 144(i)(1) under the 1933 Act (a “Shell Company”). The
Company acknowledges and agrees that (a) it is essential to the Buyer that the
Buyer be able to sell Common Stock the Buyer receives under the Note in reliance
on Rule 144, (b) if the Company were or ever had been a Shell Company, any
Common Stock received by the Buyer under the Note could not be sold in reliance
on Rule 144 (at least without satisfying additional conditions), and (c) Buyer
is relying on the truth and accuracy of the Company’s representation in the
foregoing sentence and the availability of Rule 144 with respect to Buyer’s
selling of Common Stock in entering into this Agreement and purchasing the Note.
 
 
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4.22. Environmental Matters.
 
(a) No Violation. There are, to the Company’s knowledge, with respect to the
Company or any of its Subsidiaries or any predecessor of the Company, no past or
present violations of Environmental Laws (as defined below), releases of any
material into the environment, actions, activities, circumstances, conditions,
events, incidents, or contractual obligations which may give rise to any common
law environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws and neither the Company nor any of its
Subsidiaries has received any notice with respect to any of the foregoing, nor
is any action pending or, to the Company’s knowledge, threatened in connection
with any of the foregoing. The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
 
(b) No Hazardous Materials. Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries, except in the normal course of the
Company’s or any of its Subsidiaries’ business.
 
(c) No Storage Tanks.  There are no underground storage tanks on or under any
real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
 
5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
 
5.1. Covenants and Acknowledgements of the Buyer.
 
(a) Transfer Restrictions.  The Buyer acknowledges that (i) 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
registration under the 1933 Act; (ii) 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 (iii) except as otherwise provided
herein, 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.
 
(b) Restrictive Legend.  The Buyer acknowledges and agrees that, until such time
as the relevant Securities have been registered under the 1933 Act, and may be
sold in accordance with an effective Registration Statement, or until such
Securities can otherwise be sold without restriction, whichever is earlier, the
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
 
 
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF
COUNSEL IN COMPARABLE TRANSACTIONS OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED, OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
 
(c) Trading Activities. During the period beginning on the Closing Date and
ending on the date that the Buyer no longer owns any of the Securities, the
Buyer will not directly or through an Affiliate engage in any open market Short
Sales (as defined below) of the Common Stock; provided; however, that unless and
until the Company has affirmatively demonstrated by the use of specific evidence
that the Buyer is engaging in open market Short Sales, the Buyer shall be
assumed to be in compliance with the provisions of this Section and the Company
shall remain fully obligated to fulfill all of its obligations under the
Transaction Documents; and provided, further, that (i) the Company shall under
no circumstances be entitled to request or demand that the Buyer either (A)
provide trading or other records of the Buyer or of any party or (B)
affirmatively demonstrate that the Buyer or any other party has not engaged in
any such Short Sales in breach of these provisions as a condition to the
Company’s fulfillment of its obligations under any of the Transaction Documents,
(ii) the Company shall not assert the Buyer’s or any other party’s failure to
demonstrate such absence of such Short Sales or provide any trading or other
records of the Buyer or any other party as all or part of a defense to any
breach of the Company’s obligations under any of the Transaction Documents, and
(iii) the Company shall have no setoff right with respect to any such Short
Sales.  As used herein, “Short Sale” has the meaning provided in Rule 3b-3 under
the 1934 Act.
 
5.2. 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 Note are paid and performed in full, or within the
timeframes otherwise specifically set forth below, the Company shall comply with
the following covenants:
 
(a) Filings.  From the date hereof until the date that is six (6) months after
all the Conversion Shares either have been sold by the Buyer, or may permanently
be sold by the Buyer without any restrictions pursuant to Rule 144 (the
“Registration Period”), the Company shall timely make all filings required to be
made by it under the 1933 Act, the 1934 Act, Rule 144 or any United States state
securities laws and regulations thereof applicable to the Company or by the
rules and regulations of the Principal Trading Market, and such filings shall
conform to the requirements of applicable laws, regulations and government
agencies, and, unless such filings are 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 filings. Without
limiting the foregoing, the Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing. Additionally, within four (4) Trading Days
following the date of this Agreement, the Company shall file a current report on
Form 8-K describing the terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and approved by the
Buyer and attaching the material Transaction Documents as exhibits to such
filing. The Company shall further 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, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of 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.
 
 
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(b) 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, and 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, 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.
 
(c) Listing.  The Common Stock shall be listed or quoted for trading on any of
(i) the NYSE Amex, (ii) the New York Stock Exchange, (iii) the Nasdaq Global
Market, (iv) the Nasdaq Capital Market, (v) the OTC Bulletin Board, (vi) the
OTCQX or (vii) the OTCQB. The Company shall promptly secure the listing of all
of the Conversion 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 shall 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) calendar days after the date on which the Note has been
converted or paid in full.
 
(d) Anti-Dilution Certification.  For so long as any portion of the Note remains
outstanding, the Company shall deliver to the Buyer, within two (2) Trading Days
of a written request by the Buyer, a certificate in the form attached hereto as
ANNEX VII (“Anti-Dilution Certificate”) whereby the Company shall notify the
Buyer of a Dilutive Issuance (as defined in the Note) or any other event(s) that
occurred since the later of the Closing Date or the delivery of the most recent
Anti-Dilution Certificate that triggers anti-dilution protection or other
adjustments to the applicable Conversion Price (each an “Anti-Dilution Event”),
or, if no Anti-Dilution Event occurred, certifying to the Buyer that no
Anti-Dilution Event occurred since the Closing Date that has not been disclosed
on a previous Anti-Dilution Certificate.
 
(e) Use of Proceeds.  The Company shall 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 (i) to any broker or
finder relating to the offer and sale of the Note unless the payment of such fee
is made in accordance with Section 4.16 below, or (ii) to any other party
relating to any financing transaction effected prior to the Closing Date.
 
(f) RESERVED.
 
(g) 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.
 
 
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(h) Keeping of Records and Books of Account. The Company shall keep and cause
each Subsidiary to keep adequate records and books of account, in which complete
entries shall 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.
 
(i) Corporate Existence.  The Company shall (i) do all things necessary to
remain duly qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary; (ii) preserve and keep 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;
(iii) continue to engage in business of the same general type as conducted as of
the date hereof; and (iv) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder.
 
(j) 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.
 
(k) 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; provided, however, that nothing provided herein shall
prevent the Company from contesting in good faith the validity or the
application of any Requirements.
 
(l) Litigation. From and after the date hereof and until all of the Company’s
obligations hereunder and the Note are paid and performed 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.
 
(m) 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.
 
(n) 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, in addition to any other available remedies in the Transaction
Documents, an amount based on the following schedule (where, for purposes of
this subsection, “No. Trading 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. Trading Days
Late                                            Outstanding Principal of the
Note
 
 
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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

 
The filing of SEC Form NT and subsequent filing of the required forms within the
applicable grace period shall not be deemed a failure to timely file under this
subsection. 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 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 Note, with the “Delivery Date”
for such shares being determined from the date of such demand. The demand for
payment of such amount in shares of Common Stock shall be considered a
“Conversion Notice” under the Note (but the delivery of such shares shall be in
payment of the amount contemplated by this subsection and not in payment of any
principal or interest on the Note).
 
(o) Share Reserve. In order to allow for, as of the relevant date of
determination, the conversion of the entire Outstanding Balance into Common
Stock, the Company shall take all action necessary from time to time to reserve
for the benefit of the Holder the number of authorized but unissued shares of
Common Stock equal to the amount calculated as follows (such calculated amount
is referred to as the “Share Reserve”): three times the higher of (A) the
Outstanding Balance divided by the Conversion Price, and (B) the Outstanding
Balance divided by the Market Price. If at any time the Share Reserve is less
than required herein, the Company shall immediately increase the Share Reserve
in an amount equal to no less than the deficiency. If the Company does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Company shall call a special meeting of the stockholders
as soon as practicable after such occurrence, but in no event later than thirty
(30) calendar days after such occurrence, and hold such meeting as soon as
practicable thereafter, but in no event later than sixty (60) calendar days
after such occurrence, for the sole purpose of increasing the number of
authorized shares of Common Stock. 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 use its best efforts to cause such additional shares of Common
Stock to be authorized so as to comply with the requirements of this subsection.
All calculations with respect to determining the Share Reserve shall be made
without regard to any limitations on conversion of the Note.
 
(p) DWAC Eligibility. At all times during which any portion of the Note remains
outstanding, the Company shall cause all DWAC Eligible Conditions to be
satisfied.
 
(q) Change in Nature of Business. The Company shall not directly or indirectly
engage in any material line of business substantially different from those lines
of business conducted by or publicly contemplated to be conducted by the Company
on the date of this Agreement or any business substantially related or
incidental thereto. The Company shall not, and the Company shall cause each of
its Subsidiaries to not, directly or indirectly, modify its or their corporate
structure or purpose if such modification may have a material adverse effect on
any rights of, or benefits to, the Holder under any of the Transaction
Documents.
 
 
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(r) Maintenance of Properties, Etc. The Company shall maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its properties
which are necessary or useful in the proper conduct of its business, in good
working order and condition, ordinary wear and tear excepted, and comply, and
cause each of its Subsidiaries to comply, at all times with the provisions of
all leases to which it is a party as lessee or under which it occupies property,
so as to prevent any loss or forfeiture thereof or thereunder.
 
(s) Maintenance of Insurance.  The Company shall maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated.
 
(t) Restriction on Redemption. The Company shall not, directly or indirectly,
redeem or repurchase its capital stock without the prior express written consent
of the Holder.
 
(u) Restriction on Transfer of Assets. The Company shall not, and the Company
shall cause each of its Subsidiaries to not, directly or indirectly, sell,
lease, license, assign, transfer, convey or otherwise dispose of any assets or
rights of the Company or any Subsidiary owned or hereafter acquired, whether in
a single transaction or a series of related transactions, other than (i) sales,
leases, licenses, assignments, transfers, conveyances and other dispositions of
such assets or rights supported by fair market value consideration as determined
in the reasonable discretion of the board of directors or the Chief Executive
Officer of the Company or its Subsidiary, as the case may be, or (ii) sales of
inventory in the ordinary course of business, or (iii) in connection with
agreements that have been disclosed in the Company’s SEC Documents prior to the
Issuance Date.
 
(v) Existence of Liens. The Company shall not, and the Company shall cause each
of its Subsidiaries to not, directly or indirectly, allow, grant, or suffer to
exist any mortgage, lien, pledge, charge, security interest, tax lien, judgment,
or other encumbrance (collectively, “Liens”), upon the property or assets
(including accounts and contract rights) owned by the Company or any of its
Subsidiaries, other than Permitted Liens.
 
(w) Intellectual Property.  The Company shall not, and the Company shall not
permit any of its Subsidiaries, directly or indirectly, to encumber or allow any
Liens on, any of its copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, patent applications and
like protections, including improvements, divisions, continuations, renewals,
reissues, extensions, and continuations-in-part of the same, trademarks, service
marks and, to the extent permitted under applicable law, any applications
therefor, whether registered or not, and the goodwill of the business of the
Company and its Subsidiaries connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, other than Permitted Liens.
 
 
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(x) Transactions with Affiliates.  The Company shall not, nor shall it permit
any of its Subsidiaries to, enter into, renew, extend or be a party to, any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease, transfer or exchange of property or assets of any
kind or the rendering of services of any kind) with any Affiliate, except in the
ordinary course of business in a manner and to an extent consistent with past
practice and necessary or desirable for the prudent operation of its business,
for fair consideration and on terms no less favorable to it or its Subsidiaries
than would be obtainable in a comparable arm’s length transaction with a person
that is not an Affiliate thereof.
 
(y) Certain Negative Covenants of the Company.  From and after the date hereof
and until all of the Company’s obligations hereunder and the Note are paid and
performed in full, the Company shall not:
 
(i) Transfer, assign, sell, pledge, hypothecate or otherwise alienate or
encumber the Secured Buyer Note in any way without the prior written consent of
the Buyer.
 
(ii) 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.
 
(iii) So long as the Note is outstanding, the Company shall not, and the Company
shall not permit any of its Subsidiaries to, directly or indirectly, pay cash
dividends or distributions on any equity securities of the Company or of its
Subsidiaries.
 
(z) Piggyback Registrations. Until all of the Company’s obligations hereunder
and the Note are paid and performed in full, the Company shall notify the Buyer
in writing at least fifteen (15) Trading Days prior to the filing of any
Registration Statement for purposes of a public offering of securities of the
Company (including, but not limited to, Registration Statements relating to
secondary offerings of securities of the Company) and will afford the Buyer an
opportunity to include in such Registration Statement all or part of the Shares
it holds. If the Buyer desires to include in any such Registration Statement all
or any part of the Shares held by it, the Buyer shall, within fifteen (15)
Trading Days after the above-described notice from the Company, so notify the
Company in writing. Such notice shall state the intended method of disposition
of the Shares by the Buyer. In the event the Buyer desires to include less than
all of its Shares in any Registration Statement it shall continue to have the
right to include any Shares in any subsequent Registration Statement or
Registration Statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein. The
parties acknowledge and agree that the Buyer’s registration rights as described
in this subsection shall not apply to any Registration Statement filed with the
SEC pertaining to securities being registered and offered on a delayed or
continuous basis pursuant to Rule 415 on behalf of Tangiers Investors, LP.
 
(aa) Rule 144 Opinion. The Company shall accept, in its reasonable discretion,
an opinion letter prepared by legal counsel of Buyer’s choosing (the “Opinion
Letter”), stating that (i) the Company is not a shell company or the type of
“issuer” defined in Rule 144(i)(1) under the 1933 Act (a “Shell Company”), (ii)
the Company has never been a Shell Company, (iii) the Company is in compliance
with all filing requirements under Rule 144 as of the date hereof, and (iv) the
Shares may be sold by the Buyer without any restrictions pursuant to Rule 144,
so long as the applicable holding period specified by Rule 144 is satisfied,
and, as applicable, the Company shall give instructions to its Transfer Agent to
issue shares of Common Stock upon conversion of the Note based upon or otherwise
consistent with such Opinion Letter.
 
 
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(bb) Transfer Agent Reserve.  From and after the date hereof and until all of
the Company’s obligations hereunder and the Note are paid and performed in full:
 
(i) the Company shall at all times require its Transfer Agent to establish a
reserve of shares of authorized but unissued Common Stock in an amount not less
than the Share Reserve or such other amount as the Holder may authorize from
time to time in writing (the “Transfer Agent Reserve”);
 
(ii) the Company shall require its Transfer Agent to hold the Transfer Agent
Reserve for the exclusive benefit of the Holder and shall authorize the Transfer
Agent to issue the shares of Common Stock held in the Transfer Agent Reserve to
the Holder only (subject to subsection (iii) immediately below);
 
(iii) the Company shall cause the Transfer Agent to agree that when the Transfer
Agent issues shares of Common Stock to the Holder pursuant to the Transaction
Documents, the Transfer Agent will not issue such shares from the Transfer Agent
Reserve, unless such issuance is pre-approved in writing by the Holder;
 
(iv) the Company shall cause the Transfer Agent to agree that it will not reduce
the Transfer Agent Reserve under any circumstances, unless such reduction is
pre-approved in writing by the Holder;
 
(v) upon Holder’s written request the Company shall increase (or decrease if
authorized by Holder in writing) the Transfer Agent Reserve as of such time to
equal the Share Reserve (each a “Transfer Agent Reserve Calculation”), and if
additional shares of Common Stock are required to be added to the Transfer Agent
Reserve pursuant to subsection (i) above, the Company shall immediately give
written instructions to the Transfer Agent to cause the Transfer Agent to set
aside and increase the Transfer Agent Reserve by the necessary number of shares
in increments of 500,000 shares of Common Stock; and
 
(vi) within three (3) Trading Days of a written request from the Buyer, the
Company shall certify in writing to the Holder (A) the correctness of the
Company’s Transfer Agent Reserve Calculation and (B) that either (1) the Company
has instructed the Transfer Agent to increase the Transfer Agent Reserve in
accordance with the terms hereof, or (2) there was no need to increase the
Transfer Agent Reserve, in either case consistent with the Transfer Agent
Reserve Calculation. If the Company has not instructed the Transfer Agent to so
increase the Transfer Agent Reserve, then Holder is hereby authorized to send
such written request to the Transfer Agent.
 
For the avoidance of any doubt, the requirements of this Section 5.1(c) are
material to this Agreement and any violation or breach thereof by the Company
shall constitute a default under this Agreement.
 
6. TRANSFER AGENT.
 
6.1. Instructions. The Company covenants that, with respect to the Securities,
other than the stop transfer instructions to give effect to Section 5.1(a)
hereof, the Company will give the Transfer Agent no instructions inconsistent
with the Transfer Agent Letter. Except as required by Sections 5.1(a) and 5.1(b)
of this Agreement and the Transfer Agent Letter, 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
subsection 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 (i)(B) of Section 5.1(a) of this
Agreement is not required under the 1933 Act or upon request from a Holder while
an applicable Registration Statement is effective, the Company shall (except as
provided in clause (ii) of Section 5.1(a) of this Agreement) permit the transfer
of the Securities and, in the case of the Conversion Shares, use its best
efforts to cause the Transfer Agent to promptly deliver to the Holder or the
Holder’s broker, as applicable, such Conversion Shares by way of the DWAC
system.
 
 
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6.2. DWAC Eligible. The Company specifically covenants that, as of the Closing
Date, all DWAC Eligible Conditions are satisfied. 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 voluntarily or involuntarily
terminate its participation in the DTC/FAST Program. While Holder holds
Securities, the Company shall at all times after the Closing Date maintain a
transfer agent which participates in the DTC/FAST Program, and the Company shall
not appoint any transfer agent which does not participate in the DTC/FAST
Program.  Nevertheless, if at any time the Company receives a Conversion Notice
and all DWAC Eligible Conditions are not then satisfied (including without
limitation because the Transfer Agent is not then participating in the DTC/FAST
Program or the Conversion Shares are not otherwise transferable via the DWAC
system), then the Company shall instruct the Transfer Agent to immediately issue
one or more certificates for Common Stock without legend in such name and in
such denominations as specified by the Holder and consistent with the terms and
conditions of the Transaction Documents.
 
6.3. Transfer Fees. The Company shall assume any fees or charges of the Transfer
Agent regarding (a) the removal of a legend or stop transfer instructions with
respect to the Securities, and (b) 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.
 
7. DELIVERY OF SHARES.
 
7.1. Delay in Issuing Shares. The Company understands that a delay in the
delivery of Conversion Shares, whether on conversion of all or any portion of
the Note and/or in payment of accrued interest, beyond the relevant Delivery
Date could result in economic loss to the Holder. As compensation to the Holder
for such loss, in addition to any other available remedies in the Transaction
Documents, the Company shall pay late payments to the Holder for late delivery
of the Conversion Shares in accordance with the following schedule (where, for
purposes of this subsection, “No. Trading Days Late” is defined as the number of
Trading Days beyond three (3) Trading Days after the applicable Delivery Date):
 
Late Payment for Each $10,000.00
No. Trading Days Late                                       of Principal or
Interest Being Converted under the Note
 

 
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

 
 
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As elected by the Holder, the amount of any payments incurred under this
Section 7.1 shall either be automatically added to the principal balance of the
Note (without the need to provide any notice to the Company) or 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 Conversion Shares to the Holder within a reasonable
time.  The Company acknowledges that if the Company fails to effect delivery of
the Conversion Shares as and when required, the Holder may revoke the Conversion
Notice pursuant to the terms set forth in the Note.  Notwithstanding any such
revocation, the charges described in this Section 7.1 which have accrued through
the date of such revocation shall remain due and owing to the Holder.
 
7.2. Buy-In Adjustment. If, by the third Trading Day after the relevant Delivery
Date, the Company fails for any reason to deliver the Conversion 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 of Common Stock 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 7.1, 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 (i) the
Holder’s total purchase price per share (including brokerage commissions, if
any) for the Covering Shares over (ii) 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.
 
7.3. Bankruptcy. The Holder of the Note shall be entitled to exercise the
Holder’s conversion privilege with respect to such Note, notwithstanding the
commencement of any case under 11 U.S.C. §101 et seq. (the “Bankruptcy
Code”).  In the event the Company is a debtor under the Bankruptcy Code, the
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. §362 in respect of such Holder’s exercise
privileges.  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 the Note. The Company agrees, without cost or expense to such Holder, to take
or to consent to any and all action necessary to effectuate relief under 11
U.S.C. §362.
 
8. CLOSING DATE.
 
8.1. The Closing Date shall occur on the date which is the first Trading Day
after each of the conditions contemplated by Sections 9 and 10 hereof shall have
either been satisfied or been waived by the party in whose favor such conditions
run.
 
 
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8.2. Closing of the purchase and sale of the Securities, 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.
 
9. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The Company’s obligation to
sell the Securities to the Buyer pursuant to this Agreement on the Closing Date
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 Company:
 
9.1. The execution and delivery of this Agreement and, as applicable, the other
Transaction Documents by the Buyer, including without limitation, the original
fully executed Secured Buyer Note.
 
9.2. Delivery by the Buyer of good funds as payment in full of an amount equal
to the Initial Cash Purchase Price in accordance with this Agreement.
 
9.3. 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.
 
9.4. 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.
 
10. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE. The Buyer’s obligation to
purchase the Securities from the Company pursuant to this Agreement on the
Closing Date 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:
 
10.1. The execution and delivery of this Agreement, the Company Security
Agreement, the Transfer Agent Letter, the Secretary’s Certificate, the Share
Issuance Resolution, and, as applicable, the other Transaction Documents by the
Company.
 
10.2. The delivery by the Company to the Buyer of the Note in original form,
duly executed by the Company, in accordance with this Agreement.
 
10.3. 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.
 
10.4. The Company shall have authorized and reserved for the purpose of issuance
under the Transaction Documents shares of Common Stock in an amount no less than
the Share Reserve as of the Closing Date.
 
10.5. 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.
 
 
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10.6. 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.
 
10.7. From and after the date hereof up to and including the Closing Date, each
of the following conditions will remain in effect: (a) the trading of the Common
Stock shall not have been suspended by the SEC or on the Principal Trading
Market; (b) trading in securities generally on the Principal Trading Market
shall not have been suspended or limited; (c) no minimum prices shall have been
established for securities traded on the Principal Trading Market; (d) there
shall not have been any material adverse change in any financial market; and (e)
there shall not have occurred any Material Adverse Effect.
 
10.8. 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 (a) all governmental approvals required in connection with the
lawful sale and issuance of the Securities, and (b) 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.
 
10.9. 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.
 
11. INDEMNIFICATION.
 
11.1. The Company agrees to defend, indemnify and forever hold harmless the
Buyer and the Buyer’s stockholders, directors, officers, managers, members,
partners, Affiliates, employees, attorneys, 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
subsection (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.
 
11.2. The indemnity contained in this Agreement shall be in addition to (a) any
cause of action or similar rights of the Buyer Parties against the Company or
others, and (b) any other liabilities the Company may be subject to.
 
 
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12. PERFORMANCE. The Company, upon receipt of a Conversion Notice concerning a
Conversion Eligible Tranche (as defined in the Note), (a) may not fail or refuse
to deliver shares or certificates representing shares of Common Stock in
accordance with the terms and conditions of the Transaction Documents, or (b) 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 to performance any claim that the Holder or anyone associated
or affiliated with the Holder has violated any provision hereof or any of the
other Transaction Documents or has engaged in any violation of law or any other
claim or defense, in either case, 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 such shares or
certificates to the Holder. The proceeds of such bond shall be payable to the
Holder to the extent that the Holder obtains judgment or the Holder’s 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.
 
13. OWNERSHIP LIMITATION. Notwithstanding anything to the contrary contained in
this Agreement or the other Transaction Documents, if at any time the Holder
shall or would be issued shares of Common Stock under any of the Transaction
Documents, but such issuance would cause the Holder (together with its
Affiliates) to beneficially own a number of shares exceeding the Maximum
Percentage (as defined in the Note), then the Company must not issue to the
Holder the excess Ownership Limitation Shares (as defined in the Note). For
purposes of this Section, beneficial ownership of Common Stock will be
determined under the 1934 Act. The Company will reserve the Ownership Limitation
Shares for the exclusive benefit of the Holder. From time to time, the Holder
may notify the Company in writing of the number of Ownership Limitation Shares
that may be issued to the Holder without causing the Holder to exceed the
Maximum Percentage. Upon receipt of such notice, the Company shall be
unconditionally obligated to immediately issue such designated shares to the
Holder, with a corresponding reduction in the number of the Ownership Limitation
Shares.  By written notice to the Company, the Holder may increase, decrease or
waive the Maximum Percentage as to itself but any such waiver will not be
effective until the 61st day after delivery thereof. The foregoing 61-day notice
requirement is enforceable, unconditional and non-waivable and shall apply to
all Affiliates and assigns of the Holder. Additionally, if at any time after the
Closing the Market Capitalization of the Common Stock (as defined in the Note)
falls below $5,000,000, then from that point on, for so long as the Holder or
the Holder’s Affiliate owns Common Stock or rights to acquire Common Stock, the
Company shall post (or cause to be posted), no less frequently than every thirty
(30) calendar days, the then-current number of issued and outstanding shares of
its capital stock to the Company’s web page located at
http://www.northbayresources.com/investors.htm (or such other web page approved
by the Holder). Additionally, within three (3) Trading Days of a written request
from Buyer, the Company (or the Company’s Transfer Agent) will provide the Buyer
the then-current number of authorized, but unissued and unreserved shares of its
capital stock. The Company understands that its failure to so post its shares
outstanding or to provide the number of unissued and unreserved shares could
result in economic loss to the Holder.  As compensation to the Holder for such
loss, in addition to any other available remedies in the Transaction Documents,
the Company shall pay the Holder a late fee of $500.00 per calendar day for each
calendar day that the Company fails to comply with the foregoing obligation to
post its shares outstanding or to provide the number of unreserved and unissued
shares as required herein.  As elected by the Holder, the amount of any late
fees incurred under this Section shall either be automatically added to the
principal balance of the Note (without the need to provide any notice to the
Company) or otherwise paid by the Company in immediately available funds upon
demand.
 
14. RESERVED
 
 
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15. MISCELLANEOUS.
 
15.1. Governing Law; Venue. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Illinois for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws.  Each party hereto hereby (a) consents to and
expressly submits to the exclusive personal jurisdiction of any state or federal
court sitting in Cook County, Illinois in connection with any dispute or
proceeding arising out of or relating to this Agreement, (b) agrees that all
claims in respect of any such dispute or proceeding may only be heard and
determined in any such court, (c) expressly submits to the venue of any such
court for the purposes hereof, and (d) waives any claim of improper venue and
any claim or objection that such courts are an inconvenient forum or any other
claim or objection 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.
Each party hereto hereby irrevocably consents to the service of process of any
of the aforementioned courts in any such proceeding by the mailing of copies
thereof by reputable overnight courier (e.g., FedEx) or certified mail, postage
prepaid, to such party’s address as set forth herein, such service to become
effective ten (10) calendar days after such mailing.
 
15.2. Successors and Assigns; Third Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the parties hereto. Except as otherwise expressly provided herein, no Person
other than the parties hereto and their successors and permitted assigns is
intended to be a beneficiary of this Agreement.
 
15.3. Pronouns.  All pronouns and any variations thereof in this Agreement refer
to the masculine, feminine or neuter, singular or plural, as the context may
permit or require.
 
15.4. Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument. The parties hereto confirm that any
electronic copy of another party’s executed counterpart of this Agreement (or
such party’s signature page thereof) will be deemed to be an executed original
thereof.
 
15.5. Headings.  The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
 
15.6. 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.
 
15.7. Entire Agreement. This Agreement, together with the other Transaction
Documents, constitutes and contains the entire agreement and understanding
between the parties hereto, and supersedes all prior oral or written agreements
and understandings between Buyer, Company, their Affiliates and Persons acting
on their behalf with respect to the matters discussed herein and therein, and,
except as specifically set forth herein or therein, neither Company nor Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters.
 
15.8. Amendment. Any amendment, supplement or modification of or to any
provision of this Agreement, shall be effective only if it is made or given by
an instrument in writing (excluding any email message) and signed by Company and
Buyer.
 
15.9. No Waiver. No forbearance, failure or delay on the part of a party hereto
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver of any provision of this Agreement
shall be effective (a) only if it is made or given in writing (including an
email message) and (b) only in the specific instance and for the specific
purpose for which made or given.
 
 
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15.10. Currency. All dollar amounts referred to or contemplated by this
Agreement or any other Transaction Documents shall be deemed to refer to US
Dollars, unless otherwise explicitly stated to the contrary.
 
15.11. Assignment. 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. This Agreement or any of the severable rights and
obligations inuring to the benefit of or to be performed by Buyer hereunder may
be assigned by Buyer to a third party, including the Buyer’s financing sources,
in whole or in part, without the need to obtain the Company’s consent thereto.
 
15.12. Advice of Counsel. In connection with the preparation of this Agreement
and all other Transaction Documents, the Company, for itself and on behalf of
its stockholders, officers, agents, and representatives acknowledges and agrees
that Buyer’s Counsel prepared initial drafts of this Agreement and all of the
other Transaction Documents and acted as legal counsel to the Buyer only.  The
Company, for itself and on behalf of its stockholders, officers, agents, and
representatives, (a) 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 (b) either
has sought such legal counsel or hereby waives the right to do so.
 
15.13. 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.
 
15.14. 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 parties agree that the party who is awarded the most money shall
be deemed the prevailing party for all purposes and shall therefore be entitled
to an additional award of the full amount of the attorneys’ fees and expenses
paid by such prevailing party in connection with the litigation and/or dispute
without reduction or apportionment based upon the individual claims or defenses
giving rise to the fees and expenses.  Nothing herein shall restrict or impair a
court’s power to award fees and expenses for frivolous or bad faith pleading.
 
15.15. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY
AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE
RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY.  THIS WAIVER EXTENDS TO
ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY
APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO
ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.
 
15.16. Rights and Remedies Cumulative.  All rights, remedies, and powers
conferred in this Agreement and the Transaction Documents are cumulative and not
exclusive of any other rights or remedies granted in this Agreement or any other
Transaction Document, and any and all such rights and remedies may be exercised
from time to time and as often and in such order as the Buyer may deem
expedient.
 
 
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15.17. Further Assurances. Each party shall do and perform or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
 
15.18. Notices. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of:
 
(a) the date delivered, if delivered by personal delivery as against written
receipt therefor or by email to an executive officer, or by facsimile (with
successful transmission confirmation),
 
(b) the fifth Trading Day after deposit, postage prepaid, in the United States
Postal Service (with USPS tracking or by certified mail), or
 
(c) the second Trading Day after mailing by domestic or international express
courier (e.g., FedEx), 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
five (5) Trading Days’ advance written notice similarly given to each of the
other parties hereto):

If to the Company:

North Bay Resources, Inc.
Attn: Perry Leopold
2120 Bethel Road
Lansdale, Pennsylvania 19446

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

Sichenzia Ross Friedman Ference LLP
Attn: Gregory Sichenzia
61 Broadway, 32nd Floor
New York, New York 10006

If to the Buyer:

Typenex Co-Investment, LLC
Attn: John M. Fife
303 East Wacker Drive, Suite 1200
Chicago, Illinois  60601
 
 
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with a copy to (which shall not constitute notice):

Hansen Black Anderson Ashcraft PLLC
Attn: Jonathan K. Hansen
2940 West Maple Loop Drive, Suite 103
Lehi, Utah 84043

15.19. Cross Default. Any Event of Default (as defined in the Note) shall be
deemed a default under this Agreement. Upon such a default of this Agreement by
the Company, the Buyer shall have all those rights and remedies available in the
Transaction Documents.
 
15.20. Expenses. Except as provided in Section 15.14, and except for the
Transaction Expense Amount required to be paid by the Company to the Buyer
pursuant to Section 2.3, 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.
 
15.21. Replacement of the Note. Subject to any restrictions on or conditions to
transfer set forth in the Note, the Holder of the Note, at such Holder’s option,
may in person or by duly authorized attorney surrender the same for exchange at
the Company’s principal corporate office, and promptly thereafter and at the
Company’s expense, except as provided below, receive in exchange therefor one or
more new secured convertible promissory note(s), each in the principal amount
requested by such Holder, dated the date to which interest shall have been paid
on the Note so surrendered or, if no interest shall have yet been so paid, dated
the date of the Note so surrendered and registered in the name of such person or
persons as shall have been designated in writing by such Holder or such Holder’s
attorney for the same principal amount as the then unpaid principal amount of
the Note so surrendered. As applicable, upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of the Note and (a) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it; or (b) in the case of
mutilation, upon surrender thereof, the Company, at its expense, will execute
and deliver in lieu thereof a new secured convertible promissory note executed
in the same manner as the Note being replaced, in the same principal amount as
the unpaid principal amount of such Note and dated the date to which interest
shall have been paid on the Note or, if no interest shall have yet been so paid,
dated the date of the Note.
 
15.22. Time of the Essence. Time is expressly made of the essence of each and
every provision of this Agreement and the other Transaction Documents.
 
16. 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 for the maximum time allowed by
applicable law, and shall inure to the benefit of the Buyer and the Company and
their respective successors and permitted assigns.
 
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IN WITNESS WHEREOF, each of the undersigned parties represents that the
foregoing statements made by such party above are true and correct and that such
party has caused this Agreement to be duly executed (if an entity, on such
party’s behalf by one of its officers thereunto duly authorized) as of the date
first above written.

PURCHASE PRICE:                                                           
$250,000.00

INITIAL CASH PURCHASE PRICE:                               $125,000.00

BUYER:

Typenex Co-Investment, LLC

By: Red Cliffs Investments, Inc., its Manager

By: /s/ John M. Fife                                                          
John M. Fife, President

COMPANY:

North Bay Resources, Inc.

By: /s/ Perry
Leopold                                                              
Printed Name: Perry Leopold                                                  
Title: CEO                                                                                  

 
 

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